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Hops Jlrirr Itettg iHrstrog Uihrrtg? 


A Consideration of Certain Economic and Common 
Law Principles Applying to Governmental 
Interferences with the Liberty 
of Trade 


By 

denrge if. iEarle, 3lr. 

of the 

PHILADELPHIA BAR 



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Does Price Fixing Destroy 
Liberty ? 1 


A Consideration of Certain Economic and Common 
Law Principles Applying to Governmental 
Interferences with the Liberty 
of Trade 




/ 

By 

GEORGE H. EARLE, Jr., 

It 

OF THE 


Philadelphia Bar 


* 


Philadelphia 

1920 



JAN 



Copyright, 1920, 


by 

George H. Earle, Jr. 


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assistance ot 


fit. Efcgar Barnes, Esq., 

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TABLE OF CONTENTS. 


Page 

Introduction . 7 

Chapter I—General Considerations . 13 

Chapter II—The Real Meaning of the Lever Act. 37 

Chapter III—The Constitutionality of the Act. 51 

Chapter IV—The Uncertainty of the Act. 63 

VCIlapter V—Prices of Commodities Cannot be Made Fair 

by Governmental Regulations. 91 

Chapter VI—The Act in Relation to the Uncertainties of 

Trade . 113 

Chapter VII—Our Paramount Interest . 149 

Chapter VIII—General Conclusions. 157 

Chapter IX—The Aftermath. 159 

Chapter X—Final Summary . 173 

Table of Cases . 179 

Bibliography . 183 



















INTRODUCTION. 


Defense of Freedom requires no apology; but, were 
it otherwise, ample excuse for this Essay is obvious 
from what we see about us. 

Men are pleading guilty, paying enormous fines, in 
some jurisdictions, whilst, in others, it is constantly 
decided that identical conduct constitutes no offense. 

One even sees those who, having taken great risks 
most helpful to trade, indignantly deny it, because 
of the undefined terrors of the Lever Act. Every busi¬ 
ness man is constantly seeking what he may or may 
not lawfully do:—with no possibility of adequate an¬ 
swer ; the freedom and courage requisite for large pro¬ 
duction, a deficiency in which prompted the Act, are 
being more and more discouraged. All history teaches 
that but few will face a possible jail term, with its ac¬ 
companying disgrace, whilst nearly all will encounter 
even death for their love of Liberty. In all England 
but four Knights could be found courageous enough to 
join with John Hampden in facing the danger of re¬ 
fusing to pay ship-money, although they were saving 
the principles upon which our liberties still rest; whilst 
Cromwell had no difficulty in recruiting his invincible 
Army. Nothing is so terrorizing as the unknown; for, 
to real danger, are added all the fears that may be 
conjured by overwrought imagination. 

But what is of compelling importance is that mis¬ 
take in the economic law may as greatly endanger 
Freedom as error in Civil Law; and that an examina¬ 
tion of the decisions so far rendered in our Federal 
Courts, touching the Lever Act (with the exception of 
those of the Supreme Court upon kindred subjects), 


(7) 


8 DOES PRICE FIXING DESTROY LIBERTY? 

discloses a complete lack of inquiry into the economic 
law of the case, the necessity of which Mr. Justice 
Holmes has pointed out in the Harvester and Northern 
Securities cases, as referred to hereinafter. 

The result has been that the lower Courts have had 
difficulty in reconciling the decisions of the Supreme 
Court in the Nash 1 case and the International Har¬ 
vester case , 1 2 although economic law entirely vindicates 
the results reached by the Supreme Court in both 
cases. The present purpose, therefore, is to in¬ 
quire into this vital though neglected part of the sub¬ 
ject ; to call attention to the economic truths that money 
and credit fluctuate as much, and often more, than 
commodities; again to point out that continuing trade 
is, in substance, only its original form of barter; to 
show that an exchange of a commodity for money con¬ 
stitutes but a single step, the second and most vital step 
being the replacement of the commodity with the money 
thus obtained. That this second step is really the de¬ 
terminative one; and that a continuing business is but 
a continuing repetition of these cycles from commodity 
back to commodity, which does not chiefly consist of 
money, but in which money is merely a device for facili¬ 
tating the barter. That past years, as well as future 
years, are necessarily involved in the matter; and the 
measurement of the risks and the necessity for con¬ 
stant replacement present problems of such ever 
varying uncertainties that, as has been pointed out 
in the International Harvester case, it is beyond 
the power of the human mind to measure them, with 
any judicial degree of certainty! 

In other words, that the exploded “mercantile sys- 


1 Nash vs. United States, 229 U. S. 373. 1913. 

2 International Harvester Company of America vs. Kentucky, 
234 U. S. 216. 1914. 



INTRODUCTION 


9 


tem,” as it always has, still remains based upon pure 
fallacies, fallacies which, if adhered to, will not 
only destroy our prosperity, but will of necessity end 
our Freedom! 

That there may, at the very beginning, be a clear 
comprehension of what it is intended to explain, a 
single illustration may suffice. There are many indict¬ 
ments founded upon the Lever Act pending in our 
Federal Courts, in substance, on the basis that a man 
who has purchased a commodity at one price and sold 
it at a much greater, is necessarily a criminal. 
Suppose he bought at five cents and sold at ten, and 
the indictment calls the latter price “unjust,” “un¬ 
reasonable” and “excessive.” Neither the Govern¬ 
ment nor the seller could know whether this were so 
at the time of the sale . This will he illustrated at large 
in the following chapters, but a few of the questions in¬ 
volved will be now mentioned. In the first place, the 
seller has to guess at what the taxes on his profits will 
be subsequently declared. They may be anywhere from 
one to one hundred per cent. He has also to guess what 
his money will be worth in the future revolutions in 
trade that will constitute his continuing business. Pro- 
fessor Fisher, of Yale, estimates that the dollar has fallen 
in purchasing power, through inflation of currency and 
credit, to but thirty-five per cent, of its rightful value. 
To say, therefore, if the seller buy at five and sell 
at ten, that he must have had criminal intent in making 
his guess, and that this can be established beyond a 
reasonable doubt, is perfectly absurd. If we but keep 
in mind that all the while he was really only exchanging 
commodities for commodities, the absurdity becomes 
perfectly apparent. For the moment, let us leave money 
out of the question. Could any man justly he indicted, 
should the result of the transaction he that he had 
borne all the expenses and risks, and yet, had ended 


10 


DOES PRICE FIXING DESTROY LIBERTY? 


with but one pound of goods to replace his original 
pound! Much less, could he be indicted, had he in the 
end actually given two pounds of goods for but one? 
An d, yet, that is substantially happening, under an in¬ 
conceivable return of the thoughts underlying the 
“commercial system” that is now being unconsciously 
revived. The minute money is introduced into the dis¬ 
cussion, its real function and complete lack of stability 
are both entirely lost sight of, resulting in preposter¬ 
ous and constant error. But, strangely this only re¬ 
lates to our own money. When it is some other coun¬ 
try’s money, we all think as clearly as Adam Smith did 
upon the subject, and wonder at its folly or com¬ 
miserate its resulting misfortunes. Take the Ger¬ 
man marks, for example, how successful an indictment 
would be there if the mercantile system is to be revived! 
On the low price of marks, a man could be proven to 
a jury to have made two thousand two hundred and 
twenty-two and one-third per cent, profit, although he 
had simply gotten one pound back for another pound. 
If it had been the Russian Government, and they had 
forced him to take their present roubles, he could be 
convicted of having profiteered to the extent of five 
thousand one hundred per cent., although all honest 
men here agree in denouncing them for really stealing 
his property. And when we come to the Austrian 
kronen, the man who had simply gotten his pound for 
pound cycle completed, would certainly go to jail when 
it was proven that in the intermediate illusory money 
step he had apparently made a profit of six thousand 
six hundred and sixty-six and two-thirds per cent.! 
This is taken only as a single illustration, for all other 
things in relation to commodities are fluctuating in the 
same way, though in varying degrees. No man ever 
has or ever will be able to forecast such situations with 
even ordinary certainty. To put him where he must 


INTRODUCTION 


11 


do so beyond reasonable doubt of error is to create a 
dilemma where, if he guesses right, he goes to jail, and, 
if he guesses wrong, he becomes a bankrupt; so that 
Governmental price fixing, as to all going business ulti¬ 
mately but means that there will be no trade sufficient 
even to pay for the keep of those men, heretofore carry¬ 
ing on the business enterprises of the United States, in 
the jails that will have to be provided for their occu¬ 
pancy. The Government constantly interfering with 
the essential “liberty of pursuit” will have ended the 
freedom of which it is so essential a part. 

The Common Law and the Supreme Court, having, 
however, always understood that economic knowledge 
is as essential to commercial law as Anatomy is to 
Surgery, have never failed properly to safeguard our 
Liberty, through their appreciation of it! 

A change in either, placing all those actively en¬ 
gaged in production under the dangers of indictment, 
for conclusions that they can only have guessed at, and 
convictions because of further guesses by juries must 
not only paralyze enterprise, but destroy all that fear¬ 
less independence of citizenship necessary for the pres¬ 
ervation of free government. An apology is made for 
repetition to be found in the following pages, however 
constant the effort by which it was sought to be avoided. 

George H. Earle, Jr. 


Philadelphia, October 1, 1920. 



CHAPTER I. 


General Considerations. 


“In favour of Liberty. * * * Impius et crudelis 

“judicandus est, qui libertati non favet. Angliae 
“jura in omni casu libertati dant favorem .” 

—Coke on Littleton, 124 b. 

With the introduction understood somewhat as 
a syllabus of the many considerations involved, 
which cannot all be stated at once, a general knowl¬ 
edge of the scope of this inquiry is gained. Little 
difficulty or discussion would have resulted from 
the consideration of the Lever Act, had the con¬ 
stant admonitions of the Supreme Court been ob¬ 
served to the effect that whether in construing such 
Acts or the Constitution itself, there must always 
be considered both the Common Law and the conditions 
under which the Constitution was adopted, and Acts 
passed in pari materia. As Mr. J ustice White says in 
the Knowlton case : 3 ‘ ‘ The then members of the Congress 
“* * * must have had a keen appreciation of the 

“influences which had shaped the Constitution and the 
“restrictions which it embodied, since all questions 
“which related to the Constitution and its adoption 
“must have been at that early date, vividly impressed 
“on their minds. * * * The people were content 
“to commit to their representatives the enactment of 
“reasonable and wholesome laws, being satisfied with 
“the protection afforded by a representative and free 

3 Knowlton et al. vs. Moore, 178 U. S. 41 (at page 57). 1900. 


(13) 



14 DOES PRICE FIXING DESTROY LIBERTY? 

“government and by the general principles of the Com- 
li mon Law protecting the inalienable rights of life, 
“ liberty and property. * * * The necessities which 
“gave birth to the Constitution, the controversies 
“which preceded its formation, and the conflicts of 
“opinion which were settled by its adoption, may prop- 
“erly be taken into view for the purpose of tracing to 
“its source any particular provision of the Constitu- 
“tion, in order thereby to be enabled to correctly in- 
“terpret its meaning ” See also: Pollock vs. Farmers 
Loan and Trust Co., 4 The Knight case, 5 The Standard 
Oil case, 6 The Craig case, 7 and Rhode Island case. 8 

It will be remembered that, as will be shown in 
detail later, an unremitting struggle had been going 
on, at least from the time of Magna Charta, between 
the English people, on the one hand, and the Trade 
Association, known as “Guilds,” and, finally, the 
Crown asserting a prerogative, to determine whether 
trade should be carried on, and prices fixed in a free 
competitive market, or whether this liberty to trade 
should or could be controlled by monopolistic price fix¬ 
ing and control either by combinations of men or the 
Government itself; and that by the Statute of James 
1 9 the victory was definitely determined in favor of 
the people, and that which they had always contended 
was essential to their freedom. 


4 Pollock vs. The Farmers’ Loan & Trust Company, 157 U. S. 

429 (see page 558). 1895. 

6 United States vs. Knight, 156 U. S. 1. 1895. 

6 Standard Oil Company of New Jersey vs. United States, 221 
U. S. 1. 1911. 

7 Craig vs. Missouri, 4 Peters 409. 1830. 

* Rhode Island vs. Massachusetts, 12 Peters 657. 1838. 

8 The Statute of 21 James I C. 3 (Statute of Monopolies) 

demolished all existing monopolies, with the exceptions of grants 
of privileges under Acts of Parliament, patents, printing, etc. It 
abolished monopilies owned or controlled by the Crown. 



GENERAL CONSIDERATIONS IS 

/ 

It will be further remembered that in the year of 
our Revolution, in 1776, Adam Smith’s great work 10 
had been published, the nature of trade carefully ex¬ 
plained ; the “mercantile system” as completely routed; 
and the true nature of business and its relation to the 
wealth of nations clearly and finally expounded in its 
most essential features. It will also be remembered 
that for twelve years thereafter the Constitution was 
either being discussed, drawn or adopted, until the 
final signature of General Washington was attached 
on the seventeenth day of December, 1787, and that the 
first ten amendments were declared in force upon the 
fifteenth day of December, 1791, a period during which 
Adam Smith’s work had been thoroughly digested and 
as thoroughly understood and accepted. 

/It is not thought necessary at the present moment 
to state the results that then had been reached at Com¬ 
mon Law, and finally buttressed by the Constitution, 
with minute exactness or in great detail; but generally 
it was held that all restraints of trade—that is to say, 
“trade” itself, not merely “traders,” —where their re¬ 
straint did not restrain trade itself,—were against the 
public welfare, and injurious; and that the greatest 
of all trade evils was when they reached the point of 
monopoly. On the other hand, the right freely to trade 
in commodities at the untrammeled discretion as to 
terms, and prices, of all who wished to compete, was 
thought, and correctly thought, not only to be a part 
of our Liberty, but perhaps, its most essential safe¬ 
guard. 

If this be not understood, error is sure to result, 
as it has already resulted, in a misunderstanding of the 
decisions of the Supreme Court of the United States; 


]0 Adam Smith’s “Wealth of Nations.’ 



16 DOES PRICE FIXING DESTROY LIBERTY? 

for, as Lord Coke has long since said: “The law is 
“not known to him who knoweth not the reason 
“thereof.” 

Monopolies, therefore, having come to be consid¬ 
ered the most “odious,’’ the most “pernicious,” the 
most injurious of trade evils, almost the equivalent of 
treason,—because they enabled individuals, in effect, to 
tax the community, not through its representatives, 
but through their own arbitrary decrees, and thus strike 
at the very root of our Liberty,—were and have always 
been considered necessarily, a subject of State con¬ 
trol. If this he not conceded, the public utility cases 
are sure to be misunderstood. 

It was found that in a certain class of cases, 
such as water, gas, electric, and transportation com¬ 
panies, the public convenience was best served by the 
organization of enterprises mompolistic in their 
nature; and so great has been the evil of monopoly 
that the State has never given up its continuing con¬ 
trol of such enterprises; even preferring all the un¬ 
certainty, danger, and difficulty of arbitrary and non¬ 
competitive price fixing to the greater evil of permit¬ 
ting a substantial power of taxation to rest in the hands 
of individuals not representative of the people who 
pay the taxes. So that all such grants have been re¬ 
ceived subject to the State’s reserved power in this re¬ 
spect. 

Accordingly, in such cases, price fixing has always 
remained a legislative function. At this point, how¬ 
ever, the Constitution steps in and provides that the 
State, even in exercising this power, cannot overrule 
the constitutional provision providing against confisca¬ 
tion. Nevertheless, and this is of the utmost import¬ 
ance, this being a legislative function, it has been de¬ 
termined that the rate fixed by the Legislature in such 


GENERAL CONSIDERATIONS 


17 


cases, being within its power, is presumptively correct 
to such a degree that nothing short of clear proof can 
abrogate it. It will thus be seen that this reduces the 
matter in these cases to a simple question of burden 
of proof and adequacy of evidence. There is nothing 
else involved. 

On the other hand, when we come to consider the 
production and sale of common commodities, the pro¬ 
duction and sale of which are open to anyone, without 
State grant or assistance, and there being no danger 
of this monopolistic taxation, it has been proven 
through the centuries that they will always, and inevi¬ 
tably, seek the “natural’’ or “normal” price that will 
tend to fair exchange with other commodities, and 
that absolutely no other method was ever tried with 
any success. That prima facie, the market price, that 
is to say, the price that is ever resulting from freedom 
in competition, is the right price; the one that will re¬ 
strict over production and at the same time stimulate 
the needed production in times of scarcity. So the 
matter is reversed and the “free” price becomes irre¬ 
futably the “fair price,” and, therefore, in such case the 
burden of proof having shifted and the duty of showing 
the contrary by sufficiently clear legal evidence, resting 
upon those who question it, the attempt to supplant it 
by criminal statute, to supplant it not only in face of 
the continuing presumption of innocence, but by evi¬ 
dence that establishes every essential fact, becomes im¬ 
possible. It is beyond all possibility to prove that a 
matter is not what it is, and always has been. 

It is manifest that in cases of a monopolistic nature, 
a decision in favor of the Government price is not neces¬ 
sarily a decision that the price fixed is reasonable, much 
less reasonable beyond all reasonable doubt (the Su¬ 
preme Court is ever pointing out how uncertain and 


18 


DOES PRICE FIXING DESTROY LIBERTY? 


difficult the matter), but is merely a decision that those 
complaining have not sustained the burden of proof 
placed upon them by public policy; whilst a decision 
against the rate by reason of the omission of any neces¬ 
sary element of calculation is conclusive proof of un¬ 
reasonableness and consequently of illegality. 

A finding, therefore, that any charge is illegal be¬ 
cause of the omission of such an essential feature, is a 
conclusive finding that those traders who have in¬ 
cluded it in their calculations have done so reasonably, 
and that if there is no ascertainable basis of reaching 
a definite test, no basis that excludes as a necessary 
element speculation, guessing or surmise, they have not, 
at least beyond all reasonable doubt, violated their duty; 
and that, where such elements of uncertainty are fixed 
conditions of business enterprises, there does not, and 
cannot exist the data upon which indictment or con¬ 
viction is possible in a free government, or after a fair 
trial within the meaning of the Constitution. Because 
free men cannot lose their liberty or property for 
errors of judgment resulting from the lack of powers 
or of the guiding of the necessary and adequate experi¬ 
ence of the ordinarily reasonable average business man. 

With this understood, nothing more clearly dem¬ 
onstrates the accuracy of the position taken by the 
Supreme Court in the International Harvester case , 11 


11 Note: In International Harvester Co., etc., vs. Kentucky, 234 
U. S. 216, 1914, the company had been prosecuted, convicted and 
fined for having entered into agreement, as it was alleged, with 
other companies for the purpose of controlling the price of har¬ 
vesters, enhancing such price above the “real value” of harvesters, 
and for having sold them at a price in excess of their “real value.” 
The Kentucky statutes, under which the prosecutions were brought, 
made punishable by fine or imprisonment agreements, or combina¬ 
tions entered into for the purpose of limiting, fixing or changing 
the price of articles or in any way to diminish their output; and 
also to prevent “all trusts from combining to depreciate below its 



GENERAL CONSIDERATIONS 


19 


the Collins case, 12 and the Pennsylvania Railroad 
case, 13 than the decisions already delivered in cases of 
monopolistic nature. Let us, therefore, now examine 
some of the principles therein enunciated, always re¬ 
membering the rules of presmnption and burden of 
proof therein involved. It will be found that, even if 
standing alone, they demonstrate that a criminal stat¬ 
ute such as the Lever Act cannot possibly be constitu¬ 
tionally enforced, because of the natural impossibility 
of proving that which is absolutely requisite. 

Mr. Justice McKenna, in the case of United States 
vs. United States Steel Corporation, which was decided 
by the Supreme Court on March 1,1920, says : 14 “* * * 
“in a case of this importance, we should have something 
“surer for judgment than speculation, something more 
“than a deduction equivocal of itself, even though the 

‘real value’ any article, or to enhance the cost of any article above its 
‘real value.’ ” The Harvester Company contended that the law 
offered no standard of conduct that it was possible to know in 
advance and to obey. The Court held that the statutes were invalid 
upon the principle that to compel a guess what the fair market 
value of commodities manufactured or sold would be under other 
than existing conditions is beyond constitutional limits. 

12 Note: In Collins vs. Kentucky, 234 U. S. 634, 1914, under 
a statute of Kentucky a pool or combine of the crops of tobacco 
and other farm products was permitted to the growers for the pur¬ 
pose of obtaining a better or higher price than by separate sale. 
It was made unlawful and punishable by a fine for any person who 
had made a “pooling agreement” to make separate sale of his crop. 
Collins, after entering into such an agreement, sold his tobacco 
crop by independent sale, and his indictment followed. He con¬ 
tended that the statute was in violation of the Fourteenth Amend¬ 
ment of the Constitution in that it deprived him of liberty and prop¬ 
erty. The Court decided that the statute was unconstitutional, and 
fundamentally defective by reason of its uncertainty. It made 11 
necessary for Collins to determine his conduct not according to 
known standards, but by speculating upon imaginary conditions in 
determining the value of his tobacco crop. 

18 United States vs. Pennsylvania Railroad Co., 242 U. S. 208. 
1916. 

14 United States vs. U. S. Steel Corporation, 251 U. S. 417 
(see pages 448 and 449). March 1, 1920. 



20 


DOES PRICE FIXING DESTROY LIBERTY? 


“facts it rests on or asserts were not contradicted. If 
“the phenomena of production and prices were as easily 
“resolved as the witness implies, much discussion and 
“much literature have been wasted, and some of the 
“problems that are now distracting the world would 
“have been given composing solution. Of course, com¬ 
petition affects prices, hut it is only one among other 
“influences, and does not more than they register itself 
“in definite and legible effect.” 

In the earlier Knoxville case , 15 the Court said: 
“Before coming to the question of profit at all, the 
11 Company is entitled to earn a sufficient sum annually 
“to provide not only for current repairs but for mak- 
“ing good the depreciation and replacing the parts of 
“the property when they come to the end of their 
“life. The Company is not bound to see its property 
“gradually waste, without making provision out of 
“earnings for its replacement. * * * It is not only 
“the right of the Company to make such provision, but 
“it is its duty, etc.” 

Of course, this duty is simplicity itself in the kind 
of case there treated, because the stock of the Company 
was chiefly invested in real property, but when one comes, 
in a rapidly fluctuating market, to calculate what may 
be necessary for replacement of commodities that must 
be entirely parted with, and then replaced,—not merely 
used, the calculation, as will be shown, is absolutely 
impossible. Again, the Court says in the same case : 15a 
“The operations of the preceding fiscal year, or of any 
“other past fiscal year, were valueless if the year was 
“abnormal. * * * If, as in this case, sufficient time 
“has passed, so that certainty instead of prophecy can 
“be obtained, the certainty would be preferable to the 

18 City of Knoxville vs. The Knoxville Water Company 212 
U. S. 1 (see page 13). 1909. 

1,a Id., page 15. 



GENERAL CONSIDERATIONS 


21 


“prophecy. In this case there could be no absolute 
“certainty, because the ordinance had 16 never been put 
“in operation. * * * Suppose, by way of illustra¬ 
tion, that before bringing suit the Company had put 
“the ordinance into effect and had observed it for a 
“number of years, and the result showed that a suffi¬ 
cient net income had been realized, is it possible that 
‘ ‘ a suit then could be brought and the evidence confined 
“to a period prior to the ordinance, and by a process 
“of speculation the conclusion reached that the ordi¬ 
nance would be confiscatory? * * * Where the 

“case rests, as it does here, not upon observation of the 
“actual operation under the ordinance, but upon spec- 
“ulation as to its effect, * * * we will not guess 

“whether the substantial return certain to be earned 
“would lack something of the return which would save 
“the effect of the ordinance from confiscation. It is 
“enough that the whole case leaves us in grave doubt.” 
And the Court thus concludes its opinion with the 
following enlightening statement : 1611 “Regulation of 
“public service corporations, which perform their 
“duties under conditions of necessary monopoly, will 
‘ ‘ occur with greater and greater frequency as time goes 
“on. It is a delicate and dangerous function. * * * 
“The Courts ought not to bear the whole burden of 
“saving property from confiscation, though they will 
“not be found wanting where the proof is clear. The 
“Legislatures and subordinate bodies, to whom the 
“legislative power has been delegated, ought to do their 
“part. Our social system rests largely upon the sanc¬ 
tity of private property, and that State or community 

18 The ordinance in question was enacted by the City of Knox¬ 
ville fixing in detail the maximum rates to be charged by the com¬ 
pany in its business of supplying the city and its inhabitants with 
water for domestic and other uses, etc. 

18a City of Knoxville vs. The Knoxville Water Co., 212 U. S. 1 
(seepage 18). 1909. 



22 


DOES PRICE FIXING DESTROY LIBERTY? 


“which seeks to invade it will soon discover the error 
“in the disaster which follows. The slight gain to the 
“consumer, * * * is as nothing compared with his 
“share in the ruin which would be brought about by 
“denying to private property its just reward, thus un¬ 
settling values. * * * If hereafter it shall appear, 
“under the actual operation of the ordinance, that the 
“returns allowed by it operate as a confiscation of prop¬ 
erty, nothing in this judgment will prevent another 
“application to the Courts.” 

After this statement of principles enunciated in a 
case where the Government started with the presump¬ 
tion in its favor, how could the decision in the Harvester 
case 17 have been otherwise, under the much more diffi¬ 
cult conditions of estimating in the case of commodities, 
and in relation to a criminal statute, whether a price is 
in excess of “real value,” or not, especially where there 
were no sales, or possibilities of real tests. And the 
Government labors under the burden of proof,—the 
duty to establish its case not bjr a mere guess, but also 
beyond all reasonable possibility of doubt. But the 
merchants under the Lever Act have thrust upon them, 
as will be seen hereafter, a far more delicate and dan¬ 
gerous function than ever before was imposed under 
any statutory or other enactment. 

In the Wilcox case , 18 Mr. Justice Peckham says: 
“All these matters make questions of value somewhat 
“uncertain; while added to this is an alleged pro¬ 
spective loss of income from a reduced rate, a matter 
“also of much uncertainty. * * * And we have a 
“problem as to the character of a rate which is difficult 


17 International Harvester Co. vs. Kentucky, 234 U. S. 216. 
1914. 

18 Wilcox vs. Consolidated Gas Company, 212 U. S. 19 (see 

page 42). 1909. 



GENERAL CONSIDERATIONS 


23 


“to answer without a practical test from actual opera - 
u tion of the rate. * * * A Court of Equity ought 
“not to interfere by injunction before a fair trial has 
“been made of continuing the business under that rate, 
“and thus eliminating, as far as is possible, the doubt 
“arising from opinions as opposed to facts. * * * 
“Such compensation must depend greatly upon cir¬ 
cumstances and locality; among other things, the 
“amount of risk in the business is a most important 
“ factor. * * * The less risk, the less right to any 
“unusual returns upon the investment. One who in- 
“ vests his money in a business of a somewhat hazard- 
“ous character is very properly held to have the right 
“to a larger return without legislative interference, 
“than can be obtained from an investment in Govern- 
“ment Bonds or other perfectly safe security. * * * 
“It, in other words, becomes matter of speculation or 
“conjecture to a great extent. * * * Taxes, even if 
“founded upon an erroneous valuation, were properly 
“treated by the Company as part of its operating ex¬ 
penses.” Although thfe proof had again failed to 
show clearly error in the governmental rate, the bill 
was again dismissed without prejudice. 

In the Northern Pacific case , 19 the Court says: 
“ There are many factors to be considered * * * the 
“ risk assumed.” And the Court again speaks of “the 
“difficult question of determining what is a reasonable 
rate.” 

Again, in the Louisville case, it is said : 20 “Where 
“an existing freight rate is attacked, the burden is on 
11 the complainant to establish that it is unreasonable 
“in fact. * * * While some elements of value are 

19 Northern Pacific Railway Company vs. North Dakota, 236 
U. S. 584. 1915. 

30 Louisville & Nashville Railroad Company vs. United States, 
238 U. S. 1 (see page n). 1915. 



24 DOES PRICE FIXING ^DESTROY LIBERTY? 

“fixed, the market price of property and work is af- 
u fected by so many and such varying factors as to 
“make it impossible to lay down a rule by which to de- 
u termine what any article or service is worth .” 

In the Lincoln Gas Company case, 21 the Supreme 
Court says: “As early as the month of January, 1909, 
“this Court, in two notable rate cases, indicated its 
“view of the importance, in any but a very clear case, 

“of subjecting prescribed rates to the test of practical 
“ experience before attacking them in the Courts. * * * 

“There are too many doubtful items for us to adjudge 
u the ordinance void, in the absence of an actual and 
“ timely test. * * * It is a matter of common knowl- 
u edge that, owing principally to the world war, the 
“ costs of labor and supplies of every kind have greatly 
“ advanced since the ordinance was adopted, and largely 
“since this cause was last heard in the Court below. 
“And it is equally well known that annual returns upon 
“capital and enterprise the world over have materially 
“increased, so that what would have been a proper 
“rate of return for capital invested in gas plants and 
“similar public utilities a few years ago furnishes no 
“safe criterion for the present or for the future.’’ As 
before in these cases the Court modified the decree of 
the Court below to be without prejudice. 

Remembering what has already been pointed out 
as to the burden of proof and necessary evidence, it 
was impossible that a Court, having such knowledge 
upon the subject, could have possibly thought other¬ 
wise than as it did in the Harvester and Collins cases, 
or could require citizens, at the peril of financial ruin 
and imprisonment, to guess what they could only guess 
at; and hold them to a correct guess where all experi- 

21 Lincoln Gas & Electric Light Company vs. City of Lincoln, 
250 U. S. 256 (see page 262). 1919 



GENERAL CONSIDERATIONS 


25 


ence, all economic thought, shows that they not only 
could not do so with any degree of certainty, much 
less beyond any reasonable doubt; and this at prob¬ 
ably the most difficult time in the whole history of 
the world. What man, when inflation and war have 
driven prices 400 per cent, above normal, can predict 
beyond reasonable doubt, when and how prices will re¬ 
cede below normal, although all know that this terrible 
decline and consequent risk are inevitable ? 

No more complete demonstration of the impossi¬ 
bility of the average human mind solving such uncer¬ 
tainties can be found than in the results of these efforts 
of the Courts, made necessary because of the monopo¬ 
listic nature of this class of enterprise. As has been 
pointed out by the Supreme Court, the ablest special¬ 
ists have consequently been employed in this work. 
In considering these problems, first the Legislatures 
act, taking all the time necessary to reach just con¬ 
clusions, then there is called into service to do the best, 
either an able master, selected by the Court, or a com¬ 
mission of trained experts, again taking all the time 
requisite, weeks, months or years; and, in turn, there 
is an appeal to a court of justice, and from its 
consideration it passes through Courts, until finally de¬ 
termined by the ablest and highest judicial body in 
the world. It, in turn, has had to introduce the new 
practice of offering opportunity of additional tests; 
although the cases have been fully heard. Finally, 
with all this the Supreme Court had to predict the 
disaster that has come, were it not to receive still fur¬ 
ther and better assistance. And all these high ex¬ 
perts were dealing with the easiest possible cases of 
price fixing; all of them had all the resources of the 
Government at their service, and, as has been said, 
none of them had to act hourly, with no time for de- 


26 


DOES PRICE FIXING DESTROY LIBERTY? 


liberation or investigation, as is inevitably the case in 
the sale of commodities. Every one knows now that 
because of the impossibility of performing the bur¬ 
den of supplying adequate facts* millions of dollars 
of property, as a fact, have failed to receive the pro¬ 
tection of the guarantees of the Constitution, and have 
suffered confiscation by the Government. Not only this, 
but the calculations have been so far astray that 
the Government itself, these industries being essential, 
has already had to tax the people millions of dollars, 
and will probably ultimately have to increase the tax¬ 
payers’ burdens even by billions to relieve the situa¬ 
tion. And, further, that nothing has done more, not 
even the inflation of the currency, than the confusion 
and failure of service which has followed, to increase 
the cost of living and inflict a general demoralization 
of production, with an enormous enhancement of cost, 
resulting from all this new uncertainty —as well as from 
the general uncertainties which have always sur¬ 
rounded the subject. Well has the Supreme Court 
declared it “A difficult and dangerous task”\ If any¬ 
body could know price fixing it would be the Supreme 
Court. Its decisions have been, in effect, always wise 
and right, and as correct as human genius permits, be¬ 
cause it has always protested against and thoroughly 
realized the impossibility of performing this task sat¬ 
isfactorily even to itself. That no one else could have 
done better is easily demonstrated. 

As sugar has been chiefly discussed in the cases, 
arising under the act, it may be herein used as the illus¬ 
tration. It is the most discussed subject, and, indeed, 
the only commodity as to which President Wilson has 
himself been willing to assume the risk and undertake 
the task of price fixing which the Act he signed, no 
doubt with the utmost patriotism and good intent, has 


GENERAL CONSIDERATIONS 


27 


placed upon the merchant; imposing as the act does fine 
and imprisonment as a penalty for not performing it to 
the satisfaction of the Government. What is now said 
is not stated with any purpose of criticism, indeed, is 
only strengthened by the admission of the President’s 
great ability, of his long and careful deliberation, before 
acting; and his unprecedented advantages for reaching 
correct results. He was offered an amount of sugar that 
would have taken care of the national needs and have 
made sugar relatively the cheapest food commodity in 
the country. The price, however, was perhaps double 
the prior minimum price. With all his advan¬ 
tages for decision, he declined the offer, and the 
market promptly advanced to over four hundred per 
cent, of normal price, costing the country, and 
adding to the price of living, hundreds of millions 
of dollars! He has been severely criticized, but, I 
think, very unjustly criticized, and for the reason 
given by the Supreme Court in the International Har¬ 
vester case. 22 The task was not capable of certain per¬ 
formance by even the powers of his active intellect. 
This can be demonstrated! In the first place, the great 
body of Cuban planters, with their long experience and 
expert knowledge, all thought the transaction was de¬ 
sirable. They were just as much in error as he. In 
the second place, it is demonstrated that the great body 
of Americans engaged and expert in the business were 
equally wrong, because, had they purchased their sup¬ 
plies in an adequate amount at the then market price, 
the subsequent rise would have been impossible, because 
of a lack of market. Again, you have a demonstration of 
the impossibility of which the Supreme Court so well 
treats in the Harvester case. If the President erred, 
it was in a mere matter of belief, not founded upon, 

” International Harvester Company vs. Kentucky, 234 U. S. 

216. 1914- 



28 


DOES PRICE FIXING DESTROY LIBERTY? 


but in contradiction to, the principles of the Common 
Law and of established political economy. Such at¬ 
tempts at price fixing, from their very nature, could 
not permanently succeed, and only tended to confusion 
and a resulting increase of prices through the accom¬ 
panying increase of risk and uncertainty. 

That the Harvester case is right, the Lever Act 
wrong, if it is to be so interpreted, seems of the easiest 
test. 

Men may, of course, be indicted if (as Justice 
Holmes says in the Nash Case) “in many instances ” 
they do not use the ordinary reasoning of the average 
man; to punish them for not having higher powers 
would be pure despotism. 

Now, the Lever Act, if anything, is an act to punish, 
not for mistake, but for inordinate greed; not for tak¬ 
ing precautions against risk, where uncertainty 
abounds; but for doing what the supposed “reason¬ 
able man” must beyond any reasonable doubt know 
was not necessary to meet all contingencies. 

But, if the average reasonable man had power to 
do this, all ordinary men must be enormously rich, for 
guessing being no longer necessary, men need not limit 
their wealth except by their wishes. So that the Act 
would require criminal punishment for not having ex¬ 
traordinary powers! It would be by legislation, an 
attempt to do the impossible, and by edict to turn mere 
surmise into mathematical deduction, and necessary 
speculation into deliberate crime! But, as statisticians 
generally agree that but one man who attempts busi¬ 
ness out of each ten, succeeds, that would be to declare 
a thing only guessed at, proven beyond reasonable 
doubt, in the face of the fact that the chances of the 
guess being right is “only one in ten ” 

And when that does occur to any large degree, it 


GENERAL CONSIDERATIONS 


29 


is largely the result of unusual and superior ability in 
guessing. Under modern methods, most of these great 
businesses are conducted by corporations, whose stocks 
can readily be obtained on the Exchange. It is mani¬ 
fest, therefore, that if this power of forecast really 
existed, those happily possessing it would shortly divide 
the wealth of the world. It is equally manifest that if 
the agents of Government, or members of juries could, 
even in a majority of cases, forecast such matter, no 
amount of salary that could be paid them would be 
adequate to keep them in Government employ. The 
world would be at their feet. The truth is that if laws 
against profiteering could be just, there would be no 
occasion for profiteering at all; for if there were no 
excessive risks or inordinate losses to be guarded 
against, there would be no occasion for equal profits 
to balance them, as all men could grow enormously 
rich, by the continued flow of never-failing gain. A 
broker, some years since, stated that not one per cent, 
of his customers, who continued to trade, ultimately 
made money, and that the most successful of them were 
those who acted on the principle that the general esti¬ 
mates must prove wrong, and so bought in contradic¬ 
tion of the general belief. That all this has been re¬ 
alized by the generations who have built up the Com¬ 
mon Law upon the subject, through an unvarying ex¬ 
perience, came from the fact that during that time 
the nature and character of business was gradually be¬ 
ing learned and understood. 

Later, that the writer may not be thought to stand 
alone in his conclusions, undisputed authority will be 
quoted to sustain the views expressed. The present 
effort is only to state their results succinctly. The 
primary distinction of business from other means of 
gaining livelihood is “risk taking” The business man 


30 


DOES PRICE FIXING DESTROY LIBERTY? 


is the “risk taker”; and, as Adam Smith correctly 
points out, the universal rule is that hope triumphs 
over fear, and that this vital element of risk is nearly 
always underestimated. It will be remembered that 
the Supreme Court has already decided that requiring 
compensation for the consequences of this risk is not 
profit at all. Again, it must be borne in mind that the 
function of money in trade, misunderstood until the 
time of Adam Smith, merely consists in aiding in the 
circulation of commodities, and is not the substance of 
the matter at all. That its real utility is not in chang¬ 
ing commodities for money, but in facilitating the 
change of commodities for commodities. “The fact is, 
“that all trade in the last analysis is simply what it 
“is in its primitive form of barter, the exchange of 
“commodities for commodities. The carrying on of 
“trade by the use of money does not change its essen¬ 
tial character, but merely permits the various ex¬ 
changes, of which trade is made up, to be divided into 
“parts or steps, and thus more easily effected. When 
‘ ‘ commodities are exchanged for money, but half a full 
“exchange is completed. When a man sells a thing for 
“money, it is to use the money in buying some other 
“thing—and it is only as money has this power that 
“anyone wants or will take it.” Beyond that, a most 
lurking danger is in the ignorant assumption that 
money has a stable value, whilst other things fluctu¬ 
ate. And this misconception constantly ruins a large 
part of the community; whilst an equally large part 
is lured to dangerous extravagance by the illusion 
that its wealth has been enormously increased when 
nothing has changed excent a depreciation of the mere 
counters that thus merely revolve trade. It has been 
said Professor Fisher pointed out that money, before 
the war, had nearly three hundred per cent, of its pres- 


GENERAL CONSIDERATIONS 


31 


ent purchasing power; this decline resulting from the 
enormous inflation that took place during the war. Be¬ 
yond that, the dealer in commodities has the problem 
of replacing these commodities and making the neces¬ 
sary calculations to d© so many times a year . He has 
to be always “guessing,” and, in a vast majority of 
cases, he guesses wrong, and so ultimately fails. Per¬ 
haps, indeed, the most vital error is in confusing 
“price” with “value.” A great number of indict¬ 
ments under the Lever Act are pending from this very 
mistake. The proof that a man has paid one price and 
has charged a hundred per cent, more and upward for 
the same goods, standing alone, really means absolutely 
nothing. The real question is whether he has prop¬ 
erly guessed what the replacement price will be; and 
that, of course, he can only do, in most cases, by mere 
surmise. His wealth consists in his commodities, and 
he is going straight to ruin, if deceived by the deprecia¬ 
tion of the counters of exchange, he fail not to replace 
that real wealth with a sum fully adequate to secure 
an equivalent amount. A Pacific Coast Judge on 
this account has just, very properly, directed a verdict 
where the illusory profit was apparently one hundred 
and fifty per cent, of the cost price. That the price 
of goods is not the wealth, but that the goods them¬ 
selves are, and that the price is but a method of ex¬ 
changing wealth for real wealth—that is, other goods 
—is an indisputable axiom of political economy. But 
let us again test this by the example of sugar, which 
we have heretofore used, taking that example for the 
additional fact that a great part of the facts actually 
are of record. 

Suppose a refiner has a stock worth ten million dol¬ 
lars with the price five cents a pound. Suppose that 
price from his best guess, is going to advance, or does ad- 


32 


DOES PRICE FIXING DESTROY LIBERTY? 


vance, to ten cents a pound, and he sells it on that 
basis, not his mere purchase price, plus a living profit, 
which is consumed. He is, therefore, demonstrated, if 
price be a just test instead of replacement value, to 
have made upward of one hundred per cent, profit. But 
he only can replace his stock, for all that has taken 
place is that, in relation to that stock, money has de¬ 
preciated. Now suppose, as has happened, he calcu¬ 
lated correctly again that sugar would go to twenty 
cents, and again charged its replacement value plus a 
living profit. He now, apparently, has turned his ten 
million dollars’ worth of counters into forty million 
dollars. The average jury, and even some judges, might 
think that atrocious. The informed business man 
would probably lie awake at nights trying to devise 
means of escaping bankruptcy. And why? As the 
Common Law, and the Supreme Court of the United 
States, have demonstrated by the Harvester and Collins 
cases, he understands the real situation. In the first 
place, at the end of the year, his illusory profit would, 
at the lowest, have to be divided with the Government. 
His taxation would, at the least, be fifteen million dol¬ 
lars, and then at any moment, and certainly some time, 
under demonstrated rules of political economy, the tre¬ 
mendous increase of production, inevitable from the 
stimulus of such prices, must drive the price below the 
original price, and probably keep it there for years, 
until increased consumption catches up with the over ¬ 
supply thus resulting. His forty million dollars of 
stock must, therefore, at some time, shrink below the 
original ten millions, demonstrating a countervailing 
loss of fifteen million of dollars. His account thus w T ould 
stand at the end with no profits except those upon which 
he had lived, and with deductions of fifteen million dol¬ 
lars for taxes, (and nothing to meet them with except 


GENERAL CONSIDERATIONS 


33 


the sum below ten million dollars which his maintained 
stock would then bring), so that he would be bank¬ 
rupt at least to the extent of five million dollars, 
and, incidentally, have additional fines to pay and 
perhaps be put in jail for criminal profiteering. 
And all this would be the result of a reversion 
to the exploded theories of the mercantile system! 
Most of these prosecutions when the matter is un¬ 
derstood, are simply attempts to punish men for not 
exchanging a greater amount of sugar, for a less 
amount, or in other words for not agreeing to an actual 
confiscation of their stock. Indeed, in the Myatt case, 23 
the indictment was for selling sugar at fourteen cents 
per pound and making four cents; and as sugar sub¬ 
sequently reached twenty-eight cents, remembering that 
the real transaction consisted of exchanging commod¬ 
ities for commodities, in that case there was a charge 
of crime, probably for no other cause than not giving 
tivo pounds of sugar for one pound. 

The purpose of the Lever Act, of course, was to 
insure, as far as possible, an indefinite and increased 
continuation of these revolutions from goods to goods, 
called “business,” so as to require not only a guess for 
a present turn, but for a security against risk in the 
many subsequently to take place. 

But everyone knows that none can foresee what our 
taxes are to be. Propositions now before Congress, if 
these errors are to prevail, would sweep away one hun¬ 
dred per cent, and upward of profit. Everyone know* 
that prices are enormously high. No one can, of course, 
know when the inevitable drop will take place. A mer¬ 
chant knows only that it must take place, as it already 
has in the case of silk and leather commodities involv- 


23 United States vs. Myatt, 264 Fed. Rep. 442. 1920. 



34 DOES PRICE FIXING DESTROY LIBERTY? 

ing not only many individuals, but a great nation, in 
serious financial difficulty. All of us now know, as 
John Stuart Mill says, in “Principles of Political 
Economy,’’ 24 “When a commodity * * * can be 

“made in indefinite quantity * * * if the value 

“* * * is such that it repays the cost of production 
“with a higher rate of profit, capital rushes to share 
“in this extra gain, and by increasing the supply of the 
“article, reduces its value. This is not a mere sup- 
“ position or surmise, but a fact familiar to those con- 
“versant with commercial operations. * * * There 
“is sure to be, in a short time, so large a production or 
“importation of the commodity, as not only destroys 
“the extra profit, but generally goes beyond the mark, 
“and sinks the value as much too low as it, before had 
“been raised too high; until the over-supply is cor¬ 
rected by a total or partial suspension of further pro¬ 
duction.” It is the one case where reaction actually 
exceeds action. 

Indeed, where has there ever been a more com¬ 
plete demonstration of these truths than is now passing 
before our eyes ? Under the law of supply and demand, 
raw sugars, notwithstanding repeated indictments for 
alleged profiteering, moved in continuing advance. 
There then came the inevitable competition from all 
parts of the world, and an enormous drop of nearly the 
equivalent of thirty-eight dollars a barrel for refined 
sugar has taken place—a decline, doubtless, largely in 
excess of any advance for which anyone has been in¬ 
dicted, and, yet, a decline that was as inevitable, at 
some time, as further large declines that are sure to take 
place. And this decline took place, at just the busiest 
season when all would have expected the highest prices! 

34 John Stuart Mill, in “Principles of Political Economy,” Book 
III, Chapter III, Section I. 



GENERAL CONSIDERATIONS 


35 


It will thus be seen from the cases referred to in 
this inquiry that the Supreme Court of the United 
States has done an immense service to the world in 
placing the freedom-preserving principles of the Com¬ 
mon Law upon the right ground, and bringing them 
within constitutional protection; whilst, at the same 
time, acting in full accord with the demonstrated 
truths of economic, as well as civil law; but no 
other court, as yet, seems to have examined the whole 
subject. 

Mr. Mill thus states the matter: 25 “Loans are 
“not the only kind of contract of which Governments 
“have thought themselves qualified to regulate the con¬ 
ditions better than the persons interested. There is 

I ‘ scarcely any commodity which they have not, at some 
“place or time, endeavored to make either dearer or 
“cheaper. * * * In some cases, as for example the 
“famous ‘maximum’ of the Revolutionary Government 
“of 1793, the compulsory regulation was an attempt 
“by the ruling powers to counteract the necessary con- 
“ sequences of their own acts; to scatter an indefinite 
“ abundance of the circulating medium with one hand, 
“and keep down prices with the other; a thing mani- 
u festly impossible under any regime except one of un- 

II mitigated terror . * * * All that Governments can 
“do in these emergencies, is to counsel a general mod- 
* 1 eration in consumption, and to interdict such kinds of 
“it as are not of primary importance. * * * A limi- 
station of competition, however partial, may have mis- 
“chievous effects quite disproportioned to the apparent 
“cause.” 


26 John Stuart Mill, in “Principles of Political Economy.” Book 
V, Chapter X, Section 3. 



36 


DOES PRICE FIXING DESTROY LIBERTY? 


We have so far been treating this Act on the basis 
that its generally assumed meaning is its real meaning. 
In the next chapter the inquiry will be whether there 
is any ground whatever for such an assumption. 


CHAPTER II. 


The Real Meaning of the Lever Act. 


If the Act 26 means what many have assumed, it 
has, unquestionably, not only wrought the greatest rev¬ 
olution that has yet taken place in our law; but has 
literally destroyed a public policy, to the development 

26 The Lever Act (Act of Congress approved August io, 1917, 
Section 4, as amended by Section 2 of the Act approved October 22, 
1919), reads thus amended as follows: 

“That it is hereby made unlawful for any person wilfully to 
destroy any necessaries for the purpose of enhancing the price or 
restricting the supply thereof; knowingly to commit waste or wil¬ 
fully to permit preventable deterioration of any necessaries in or 
in connection with their production, manufacture, or distibution; 
to hoard, as defined in Section 6 of this Act, any necessaries; to 
monopolize or attempt to monopolize, either locally or generally, 
any necessaries; to engage in any discriminatory and unfair, or any 
deceptive or wasteful practice or device, or to make any unjust or 
unreasonable rate or charge in handling or dealing in or with any 
necessaries; to conspire, combine, agree, or arrange with any other 
person, (a) to limit the facilities for transporting, producing, har¬ 
vesting, manufacturing, supplying, storing, or dealing in necessaries; 
lb) to restrict the supply of necessaries; (c) to restrict distribution 
of any necessaries; (d) to prevent, limit, or lessen the manufacture 
or production of necessaries in order to enhance the price thereof; 
or (e) to exact excessive prices for any necessaries, or to aid or 
abet the doing of any act made unlawful by this section. Any per¬ 
son violating any of the provisions of this section upon conviction 
thereof shall be fined not exceeding $5,000 or be imprisoned for not 
more than two years, or both: Provided, That this section shall not 
apply to any farmer, gardener, horticulturist, vineyardist, planter, 
ranchman, dairyman, stockman, or other agriculturist, with respect 
to the farm products produced or raised upon land owned, leased, 
or cultivated by him: Provided further, That nothing in this Act 
shall be construed to forbid or make unlawful collective bargaining 
by any co-operative association or other association of farmers, 
dairymen, gardeners, or other producers of farm products with 
respect to the farm products produced or raised by its members 
upon land owned, leased or cultivated by them.” 

( 37 ) 





38 DOES PRICE FIXING DESTROY LIBERTY? 

of which all our legislation has been passed during the 
last thirty years, and nullified the results of thirty 
years of intensive consideration by the Supreme Court 
of the United States. 

And, what is more, all this has been accomplished 
by but three words 27 in a general statute. It is simply 
astonishing, therefore, that, up to this time, no ade¬ 
quate inquiry has been found upon this subject; and 
that its discussion has been solely by law taken for 
granted, instead of law declared through judicial proc¬ 
esses; as this is not only an unsafe method; but, as 
was to be expected, has resulted in most serious con¬ 
fusion and harmful results, there seems to be propriety 
in further inquiry. 

Upon the point of the real meaning of the Act the 
strangest enigma of the whole subject must not escape 
our consideration. Bearing in mind that throughout 
the whole history of the Common Law, it has been con¬ 
sidered that it was part of the common liberty for men 
to buy and sell their property in a free market, always 
restrained, but only restrained by free competition. 
Remembering, consequently, that all interference with 
such trading, whether by guilds, combinations, or even 
Government, were held illegal as invasions of that Lib¬ 
erty that our Constitution was adopted to safeguard. 
And not forgetting that all experience has always shown 
that no other system has ever either continued, or failed 
to be injurious, and finally, that these fundamental 
truths have been so wrought into our jurisprudence 
that for generations it has been settled that where 
prices are thus fixed they are not only “just and rea¬ 
sonable prices,” but their best and conclusive evidence; 
and that Judges have for an unmeasured time al¬ 
ways so instructed juries. How can it be explained, 

27 That is—“unjust,” “unreasonable” and “excessive.” 



THE REAL MEANING OF THE LEVER ACT 


39 


when the Act used exactly the same terms the Com¬ 
mon Law had so continually defined, that so many have 
simply taken it for granted that it meant exactly the 
opposite; and thus destroyed the freedom of men to 
trade in open competition. That for the first time in 
all history, men were to be punished for following the 
guidance of the Courts, no other regulation for their 
conduct being even substituted. 

How could it be possible for a learned Judge, in 
a suit for damages brought for the non-delivery of 
goods under a contract, to tell a jury that a just, proper 
and reasonable price as a measure of damages was the 
price fixed in an open competitive market (called by 
our judges “the market price”) ; and in a criminal in¬ 
dictment for exactly the same transaction instruct it 
that the same thing was ample evidence upon which it, 
beyond a reasonable doubt, could convict for a “crime” 
committed within the Lever Act. 

Certainly, heretofore, an unjust and unreasonable 
price has always been a price arbitrarily fixed other 
than by free trading, whether by Government or other 
freedom-destroying method. Is not the question as to 
how such a violent change is supposed to have taken 
place by a mere use of the words always used with this 
established meaning,—as Lord Dundreary would say, 
“one of those things no fellow can find out”? It cer¬ 
tainly is not allowable by any judicial methods here¬ 
tofore prevailing. 

The language of Mr. Chief Justice White in the 
Wilder case, 28 exactly covers the ordinarily assumed 
meaning: “In the first place,” he says, “the conten¬ 
tion cannot be sustained consistently with reason. It 
“ overthrows the general law. * * * In the second 

28 Wilder Mfg. Co. vs. Corn Products Refining Co., 236 U. S. 
165 (see page 173). 1915- 




40 DOES PRICE FIXING DESTROY LIBERTY? 

“place, the proposition is repugnant to the Anti-trust 
“Act” 

The greater part of the material necessary to es¬ 
tablish these contentions is to be found in the Act it¬ 
self and in Chief Justice White’s exhaustive opinion in 
the Standard Oil Company case, 29 treating of the Sher¬ 
man Act, which, is in pari materia 30 to the statute now 
under consideration: “We shall,” he says, “make our 
“investigation * * * in the light of the common law 
“and the law of this country at the time of its adop¬ 
tion. * * * It is certain that those terms, 290 at least 
“in their rudimentary meaning, took their origin in 
“the common law, and were also familiar in the law of 
“this country prior to and at the time of the adoption 
“of the Act in question. We shall endeavor, then, first 
“to seek their meaning * * * by making a very 

“brief reference to the elementary and indisputable 
“conceptions of both the English and American law on 
“the subject prior to the passage of the Anti-trust 
Act.” After pointing out that “by the Common Law 
“monopolies were unlawful because of their restric¬ 
tion upon individual freedom of contract and their 
“injury to the public,” and that one of the injuries 
that resulted “is an undue enhancement of price,” and 
that’ the freedom of contract of the individual was 
preserved not only in his own interest, but “princi¬ 
pally in the interest of the commonwealth”; and that 
“from the development of more accurate economic con¬ 
ceptions and the changes in conditions of society it 

20 Standard Oil Co. vs. United States, 221 U. S. i. 1911. 

29a The terms “restraint of trade,” “attempt to monopolize” and 
“monopolize.” 

30 The Sherman Act, the Clayton Act, the “Commodities Clause 
of the Hepburn Act,” and the Lever Act, together with other like 
enactments of Congress, are “in pari materia” in the sense that they 
relate to the general subject of trade regulation and must be con¬ 
strued with reference to each other. 




THE REAL MEANING OF THE LEVER ACT 


41 


“came to be recognized that the acts prohibited by the 
“engrossing, forestalling, etc., statutes did not have the 
“harmful tendency, * * * but, on the contrary tended 
“to fructify and develop trade/’ and had, therefore, 
been repealed. “This would seem to manifest, either 
“consciously or intuitively, a profound conception as 
“to the inevitable operation of economic forces and 
4 'the equipoise or balance in favor of the protection 
"of the rights of individuals which resulted. * * * 
“After all, this teas but an instinctive recognition of 
“the truisms that the course of trade could not be made 
“free by obstructing it, and that an individual’s right 
“to trade would not be protected by destroying such 
"right. From the review just made, it clearly results 
“that * * * outside of the want of right to restrain 
“the free course of trade by contracts or acts which 
“implied a wrongful purpose, freedom to contract and 
“to abstain from contracting and to exercise every rea¬ 
sonable right incident thereto became the rule in the 
“English law. The scope and effect of this freedom 
“to trade and contract is clearly shown by the decision 
“in Mogul Steamship Co. vs. McGregor (1892), A. C. 
“25. * * * here, as had been the case in England, 
“practical common sense caused attention to be con¬ 
centrated * * * to the result itself and to the rem¬ 
edying of the evils which it produced. * * * It is also 
“true that * * * the principles concerning contracts 
“in restraint of trade * * * came generally to be 
“recognized in accordance with the English rule, it 
“came moreover to pass that contracts or acts which it 
“was considered had a monopolistic tendency, espe¬ 
cially those which were thought to unduly diminish 
“ competition and hence to enhance prices * * * came 
“also * * * to be spoken of and treated as they 

“had been in England. * * * very briefly survey- 


42 


DOES PRICE FIXING DESTROY LIBERTY? 


“ing the whole field, it may be with accuracy said that 
“the dread of enhancement of prices and of other 
“wrongs which it was thought would flow from the un- 
“due limitation on competitive conditions * * *, in 
“view of the common law and the law in this country 
“as to restraint of trade * * * and the illuminating 
“effect which that history must have under the rule to 
“which we have referred, we think it results: That the 
“context manifests that the statute was drawn in the 
“light of the existing practical conception of the law, 
“* * * It indicates a consciousness that the freedom 
“of the individual right to contract when not unduly 
“or improperly exercised was the most efficient means 
“for the prevention of monopoly, since the operation 
“of the centrifugal and centripetal forces resulting 
“from the right to freely contract was the means by 
“which monopoly would be inevitably prevented. * * * 
“In other words, that freedom to contract was the es- 
“sence of freedom from undue restraint on the right to 
“contract” 

There could not be a clearer statement of the 
oft-demonstrated principle that the greatest protection 
possible against excessive prices was to be found in 
safeguarding the freedom of competition, which, of 
course, could not exist if its chief method of underbid¬ 
ding was wrested from free traders. In other words, 
it certainly has been the law heretofore, both statutory 
and common, that in accord with sound economic the¬ 
ories, unreasonable and excessive prices were those that 
were created by monopolistic restraints on trade, and 
which were best checked by preserving the right to en¬ 
gage in free competition. Since the time of King John, 
that has been steadily contended for, and without in¬ 
termission. There has at no time been any excessive 
price, however high the price may be, when that price 


THE REAL MEANING OF THE LEVER ACT 43 

was fixed by freemen in a free market . Excessive price 
has thus, again and again, been defined for centuries. 
Excessive price is, and has always been, a price arrived 
at by some illegal method, and not by free competition, 
its only real cure. 

Again, in the Tobacco case , 31 it is pointed out that 
the remedial purpose which the Act contemplated was 
to prevent the destruction of liberty of contract and 
all substantial right to trade and not to cause “ the Act 
“to be at war with itself by annihilating the funda- 
“ mental right of freedom to trade, which, on the very 
“face of the Act, it was enacted to preserve.” 

Again there could be no more forcible statement 
that the law (unless repealed by the Lever Act because 
of its three words, “unjust,” “excessive” and “un¬ 
reasonable”), still is, according to centuries of Com¬ 
mon Law and all our prior statutory law, that com¬ 
petition is not only “the life of trade,” but also “the 
mother of cheapness.” That freedom, if preserved by 
law against monopolistic restraint, is the best and, 
indeed, the only safeguard ! It is difficult to under¬ 
stand how anyone familiar with the subject and the 
decisions, can reasonably think that three perfectly 
familiar words, that have had a legal meaning for cen¬ 
turies to the contrary, are sufficient to set at nought 
all the work of great lawyers and economic thinkers. 
The cases are numerous that when words in a certain 
connection, in statute or in law, are given a constant 
meaning, it takes demonstration to the contrary not to 
so understand them in a subsequent statute. In addi¬ 
tion, this change of interpretation if constitutional, 
would cause the greatest confusion in fixing the meas¬ 
ure of damages in all civil suits, in all accountings of 

81 United States vs. American Tobacco Company, 221 U. S. 106 
(at page 180). 1911. 



44 


DOES PRICE FIXING DESTROY LIBERTY? 


Trustees, and in too numerous phases of the relations 
of individuals. The inconveniences would be enor¬ 
mous ! But the Supreme Court has said, in the Knowl- 
ton case , 32 “That where a particular construction of 
“a statute will occasion great inconvenience or produce 
“inequality and injustice, that view is to be avoided if 
“another and more reasonable interpretation is pres¬ 
ent.” 

If the decisions of the Supreme Court are to be 
regarded, no such result can follow, for “in cases ad- 
“mitting of doubt, the intention of the lawmaker is to 
“be sought in the entire context of the section—statute, 
“or series of statutes in pari materia as decided in 
the Atkins case . 33 “It is elementary when the constitu¬ 
tionality of a statute is assailed, if the statute be rea¬ 
sonably susceptible of two interpretations, by one of 
“which it would be unconstitutional and by the other 
“valid, it is our plain duty to adopt that construction 
“which will save the statute from constitutional in- 
“firmity. * * * The rule plainly must mean that 

“where a statute is susceptible of two constructions, by 
“one of which grave and doubtful constitutional ques¬ 
tions arise and by the other of which such questions 
“are avoided, our duty is to adopt the latter as held 
in the Delaware case . 34 Again, in the Washington 
case : 35 “Repeals by implication are not favored and 
“usually occur only in cases of such irreconcilable con- 
il flict between an earlier and later statute that effect 
“cannot reasonably be given to both.” “Whenever a 
“departure from common law rules and definitions is 

32 Knowlton et al. vs. Moore, 178 U. S. 41. 1900. 

83 Atkins vs. The Fiber Disintegrating Company, 18 Wall. 272. 
1874. 

84 United States vs. Delaware & Hudson Company, 213 U. S. 
366, 1909. 

88 Washington vs. Miller, 235 U. S. 422. 1914. 



THE REAL MEANING OF THE LEVER ACT 


45 


“claimed, the purpose to make the departure should be 
“clearly shown/' as said by Justice Brewer in his con¬ 
curring opinion in the Northern Securities case . 36 

The Chief Justice has shown, in the Standard Oil 
case, as plainly as it can be made, that undue prices 
are prices that result from monopoly, because the nor¬ 
mal or proper price, the non-excessive price, is the price 
fixed in free competition. For, as the political econo¬ 
mists have declared, this always tends to an equaliza¬ 
tion of profits and the exchange of commodities upon 
a fair basis. When, however, you come to civil cases, 
the uninterrupted definition of fair prices has always 
been the same. Where damages have to be fixed by a 
jury, a reasonable price has always been the market 
price fixed in free competition. It would be impossible 
to cite all the cases upon this point, but reference is 
made to Hopkins vs. Lee , 37 where the Court says: 
“Otherwise, the vendor, if the article have risen in 
“value, would always have it in his power to discharge 
‘ ‘ himself from the contract and put the enhanced value 
“in his own pocket” To the same effect is the prin¬ 
ciple sustained in New York vs. Estill , 38 Roberts vs. 
Benjamin , 39 and Western Union Telegraph Co. vs. 
Hall . 40 The Supreme Court, as now constituted, de¬ 
clares the same law in the Gulf case . 41 Trustees are 
surcharged if in the performance of their duties they 
do not obtain a known market price in a sale of prop- 

36 Northern Securities Co. vs. United States, 193 U. S. 197 (at 

page 361). 1904. 

37 Hopkins vs. Lee, 6 Wheat, 109 (at page 118). 1821. 

38 New York, Lake Erie & Western Railroad Co. vs. Estill, 147 

U. S. 591 (at page 616). 1893. 

89 Roberts vs. Benjamin, 124 U. S. 64. 1888. 

40 Western Union Telegraph Co. vs. Hall, 124 U. S. 444 (at 

page 456). 1888. 

41 Gulf, Colorado & Santa Fe Railway Company vs. Texas Pack¬ 
ing Company, 244 U. S. 31 (at page 37). 1917. 



46 DOES PRICE FIXING DESTROY LIBERTY? 

erty belonging to the trust estate. The reasonable price 
under the common counts in pleading at Common Law 
was always the market price. 

If it is not to be so, how are the Judges ever to in¬ 
struct a jury? Shall they now say that there no longer 
is any measure of damages except that which may, some 
time in the future, be determined by the Supreme Court 
of the United States after a criminal prosecution has 
been brought? The state of trade will become appal¬ 
ling and impossible. 

But we may dismiss all this, for, if all the sections 
of the Act be examined, it shows that it was adopted 
in full recognition and agreement with the law as laid 
down in the Standard Oil case. In the first place, the 
words in Section 4 as amended are used in connec¬ 
tion with acts so unlawful at Common Law and under 
the Sherman Act as to make the profit resulting “ un¬ 
reasonable,’ ’ “unjust” and “excessive,” as constantly 
determined. In the second place, one of the sections 
of the Act actually protects, by double penalty, “ the 
market price” from unfair manipulation which 
would have no effect if it contemplated other than the 
meaning universally given to the term. Thirdly, it prop¬ 
erly denominates the funds given to the President to be 
used in business as “ revolving funds,” showing a keen 
and exact perception of the necessary nature of business 
transactions, as well as the difficulty of following them 
to an ultimate conclusion, before that conclusion has 
even been reached. In the-fourth place, even where 
the President does fix the price, it is still to be fixed, if 
unsatisfactory, on the usual basis. His decree is to be 
in nowise final. And, finally, and most conclusively, in 
the case of certain of the essential commodities, it actu¬ 
ally provides for the establishment of a governmental 
guarantee for the maintenance of a price, perhaps, over 


THE REAL MEANING OF THE LEVER ACT 


47 


two hundred per cent, of the normal price, to stimu¬ 
late increased production, showing a complete realiza¬ 
tion of the truth enforced by the Common Law that 
such is the proper and most effective way of securing 
“adequate supplies in times of scarcity.” To say that 
such a statute, in pari materia with similar statutes, 
without a word of repeal, demonstrates an implied de¬ 
termination to wreck our whole system of statutory and 
judicial determination of this matter, goes beyond the 
bounds of reason. As has already been said, nothing 
could be more astonishing than that it should havq 
been even discussed as a possibility, much less assumed 
without any argument. So far as this question is con¬ 
cerned, the statute, properly construed “in the light 
of well-settled principles,” is plainly constitutional. 

Two considerations pointed out by Judge Connor 
in the Myatt case, 42 are of value. The first that ‘ ‘ a fair 
“and reasonable construction of the entire section 
“would make the purpose or intent an essential ele- 
u ment in the unlawful character of each of them”; and 
second, as he thus states it: 43 “It is significant that 
“neither of the words ‘price’ or ‘profit’ is found in 
“either of the prohibited acts which may be committed 
“by a single person.” 

This leads to a fact constantly overlooked. At 
Common Law men were not only permitted to obtain 
bargains, but profit by them. Indeed, with free com¬ 
petition, the more bargains that were obtained, the bet¬ 
ter for the consumer, as those having obtained them 
would in their competition be naturally able and 
tempted to give the public at least a portion of the 
benefit. If the incentive were to be taken away, it would 
inevitably tend to higher prices. Now, the Act scrupu- 

42 United States vs. Myatt, 264 Fed. 442. 1920. 

43 Id., page 448. 



48 DOES PRICE FIXING DESTROY LIBERTY? 

lously avoids any mention of such profits. And it can¬ 
not be written into a criminal statute. The supposed 
offense is restricted to unjust, unreasonable and exces¬ 
sive prices. That a large profit was made is unimport¬ 
ant, provided that the price charged was not excessive. 
And excessive prices were already defined by law! 
The Act in nowise overrules Hopkins vs. Lee; 44 but 
most of the indictments are under a non-existent sup¬ 
posed Act, and, in substance, merely charge that a man 
bought at one price and sold at a higher price. Whether 
this was an excessive price is not made clear, and 
leaves the matter in equilibrio, as is well illustrated by 
the case where a man was indicted for selling an article 
at one-half the price at which he might on the actual 
results have had to replace it, if his business were to con¬ 
tinue. When it is remembered that the Act requires 
merely that he be “reasonable,’’ the proof required 
must be at least beyond reasonable doubt that he could 
not reasonably have even made such a surmise as to 
risk—which, of course in the case of commodities, is 
substantially an impossible task. 

Another consideration that has been strangely 
overlooked is that under the provisions of the Act there 
is such a recognition of the principles underlying the 
working of the law of supply and demand through free 
competition that the Government itself actually and 
by arbitrary edict fixed the price of wheat, for instance, 
at largely upward of two hundred per cent, in excess of 
that “dollar wheat” that the farmers, not so long since, 
were actually praying for. To argue, therefore, that 
an Act, thus actually applying the Common Law stand¬ 
ard of free competition to obtain its natural results, 
was an Act intended to repudiate its own method, and 
make it criminal should the same incentive come about 

44 Hopkins vs. Lee, 6 Wheat. 118. 1821. 



THE REAL MEANING OF THE LEVER ACT 


49 


through the free course of trade approaches absurdity. 
To indict citizens, should their combined efforts in a 
free market bring about the same results as the Gov¬ 
ernment’s edicts, could not have been the intention of 
the Act. And the Government could not have intended 
that prices so resulting were to be punished as exces¬ 
sive and in violation of its provisions. 

But there are other questions of constitutionality 
that should be discussed, and they will be reserved for 
the next chapter. 



CHAPTER III. 


The Constitutionality of the Act. 


Some of the difficulties, indeed most of them, under 
this heading, disappear, if the Lever Act be interpreted 
as it should be; but as there has been some contention 
(and even judicial opinion in our United States Courts 
though, contradicted by many reaching the oppo¬ 
site conclusion) that the Act intended all the revolu¬ 
tionary and unconstitutional things hereinbefore dis¬ 
cussed, it may be proper to discuss its constitutionality, 
as so incorrectly interpreted; and that will be taken 
up shortly. But, in the first place, even if the purpose 
of the Act looked, on the contrary, to the high end, as 
it is believed it did, of further safeguarding the lib¬ 
erty of those engaged in trade, it contains one blemish 
which properly should, and must nullify it, unless the 
Supreme Court is to depart from essentially right de¬ 
cisions, so often reaffirmed by it without dissent. 

The Act makes it unlawful in substance 45 for any 
person wilfully to destroy any necessaries for the pur¬ 
pose of enhancing the price or restricting the supply 
thereof; knowingly to commit waste, of, or to hoard 
necessaries, to monopolize, or to engage in discrim¬ 
inatory, deceptive or wasteful practices or devices af¬ 
fecting necessaries, to conspire or combine in transport¬ 
ing, producing, harvesting, supplying or dealing in 
necessaries, to restrict the supply, or distribution 
thereof, to prevent, limit or lessen the manufacture or 

« See Note 26 , page 37 , supra, for exact phraseology of Section 
4 of the Act, as amended. 


(51) 




52 DOES PRICE FIXING DESTROY LIBERTY? 

production in order to enhance the price, or to ex¬ 
act unjust, unreasonable or excessive prices for nec¬ 
essaries. Intentionally to do any of these acts in 
a period of extreme public peril, would certainly 
be unpatriotic and wrongful. There can he no earthly 
reason, no reasonable foundation, for legislating that 
any citizen of the United States should be permitted to 
wage war against the vital interests of his country. 
And as food entirely arises and is produced from the 
soil, and can never serve its purpose if there destroyed, 
to no class should these prohibitions more urgently ap¬ 
ply than those engaged in such primary production; 
and yet the Act actually provides: ‘‘That this section 
“shall not apply to any farmer, gardener, horticultur¬ 
ist, vineyardist, planter, ranchman, dairyman, stock- 
“man, or other agriculturist, with respect to the farm 
“products produced or raised upon land owned, leased, 
“or cultivated by him”; and then further provides that 
they alone can co-operate, so far as their production is 
concerned, in what the drafters of the Act are pleased 
to call “collective bargaining,” and what the law in 
any other case would call “criminal conspiracy.” 

These provisions, it is conceived, are far from com¬ 
plimentary to the patriotism of a very large class, of 
which the writer is one, who, there is no reason to be¬ 
lieve, wish to commit crimes against the welfare of 
their country in a time of its greatest peril. 

But the Supreme Court, having already condemned 
and declared unconstitutional a far less vicious ex¬ 
emption found in a statute of the sovereign state of 
Illinois in an opinion covering nearly ten pages of most 
effective reasoning, it would be impertinent to attempt 
improvement, and the Connolly case, 46 is referred to 


4 * The facts in Connolly vs. Union Sewer Pipe Co., 184 U. S. 
540, 1902, were as follows: The Union Company brought suit 



THE CONSTITUTIONALITY OF THE ACT S3 

as the most complete discussion of this question; a 
similar conclusion being reached in the late case of 
McFarland vs. American Sugar Refining Company , 47 
in the last paragraph of Mr. Justice Holmes’ opinion. 

If the reasoning of Mr. Justice Harlan deliver¬ 
ing the opinion of the Court in the Connolly case is fol¬ 
lowed, the classification made between the citizens of 
the United States by this exemption clause of the Act 
most certainly infringes the constitutional rights of citi¬ 
zens to be protected against discriminatory and class 
legislation. The vigorous denunciation by Justice 
Harlan of such exemptions in legislation may be 
gathered from the following language of his opinion: 46a 
“We conclude this part of the discussion by saying 

against Connolly upon two promissory notes given for sewer pipe 
sold and delivered to him. Connolly refused to pay the notes at 
maturity on the sole ground that the Union Company was: (i) a 
trust or combination contrary to the common law, (2) a combina¬ 
tion contrary to the Sherman Anti-Trust Act, (3) and a combination 
contrary to the Illinois Anti-Trust Act. Under the Illinois Act it 
was provided that any contract made by a company violating the 
act was “absolutely void and not enforcible.” This Act also con¬ 
tained the following vital section: “ The provisions of this act shall 
not apply to agricultural products or livestock while in the hands of 
the producer or raiser ” The Court decided as to the first two 
propositions that a buyer could not refuse to comply with his con¬ 
tract of purchase on the ground that the seller was an illegal com¬ 
bination ; and that the combination could be illegal, and yet the sales 
of property owned by it be valid. The Court declared the Illinois 
Statute was unconstitutional as it was discriminatory and repugnant 
to the Fourteenth Amendment, which provides “that no State shall 

* * * * deny to any person within its jurisdiction the equal pro¬ 

tection of the laws.” The Court pointed out that under the Statute 
all persons engaged in trade or commerce, except agriculturalists 
and raisers of livestock, who combined their capital, skill or acts 
might be punished as criminals, while the latter might combine to 
destroy competition and control prices for their own benefit without 
a violation of law. The exemption of the Statute was arbitrary 
classification. Judgment for the company upon the notes was af¬ 
firmed. 

48a Connolly vs. Pipe Co., 184 U. S. 540 (see page 564). 1902. 

47 McFarland vs. American Sugar Refining Co., 241 U. S. 79 
(see page 86). 1916. 



54 


DOES PRICE FIXING DESTROY LIBERTY? 


“that to declare that some of the class engaged in do- 
“mestic trade or commerce shall be deemed criminals 
“if they violate the regulations prescribed by the State 
“for the purpose of protecting the public against illegal 
“combinations formed to destroy competition and to 
“control prices, and that others of the same class shall 
“not be bound to regard those regulations, but may 
“combine their capital, skill or acts to destroy compe¬ 
tition and control prices for their special benefit, is 
“so manifestly a denial of the equal protection of the 
“laws that further or extended argument to establish 
“that position would seem to be unnecessary.’’ How¬ 
ever, it may be noted in this connection, as exemplify¬ 
ing the diversity of views upon these vital questions 
that Judge Manton, delivering the opinion of the Cir¬ 
cuit Court of Appeals for the Second Circuit, in Weed 
& Co. vs. Lockwood, 48 rules “that Congress could make 
“this classification and it be held not in contravention 
“of the Constitution, International Harvester Co. vs. 
“Missouri, 234 U. S. 199,” and Judge Hough, a mem¬ 
ber of the same Court, and concurring in the opinion, 
says: “It would also be constitutionally obnoxious, 
“because it is a gross piece of class legislation—incap¬ 
able of distinction from that condemned in Connolly 
“vs. Union, etc., Co., 184 U. S. 540.” 

The objections are so many, if the assumed inter¬ 
pretation of the act is to stand, that the only difficulty 
is to know where to begin, or how many of them to 
discuss. 

Let us start by paraphrasing the Act as thus incor¬ 
rectly interpreted. Its provisions would then mean (1) 
that no owner of merchandise had longer any right to 


48 Weed & Co. vs. Lockwood, Circuit Court of Appeals, Second 
Circuit (not yet reported). Opinion of District Court in 264 Fed. 
Rep. 453. 1920. 



THE CONSTITUTIONALITY OF THE ACT 


55 


place his own value on his own property; (2) that in 
guessing at what he should charge, the century-old 
method of seeking an open market, controlled only by 
free and untrammeled competition, was denied him; 
(3) that the Government, substituting no standard of 
guidance for the one taken away, first makes him guess, 
and second makes him guess with a mind so trammeled 
by fear that the guess of a jury will not accord with his 
guess, and will likely subject him to years of imprison¬ 
ment and enormous fines. All of such dangers and un¬ 
certainties must so paralyze his mind, if he really be¬ 
lieved the Courts would permit such things, as to inca¬ 
pacitate him from any proper use of his faculties— 
freedom of mind being as essential a part of liberty, as 
that of body; (4) that it would constitute an usurpa¬ 
tion of the judicial power of the Government by 
the legislative power, making it dangerous in the 
extreme for citizens to appeal to the Courts for 
protection and for interpretation of their property 
rights; (5) that as the Act expressly gives these con¬ 
stitutional rights to citizens dealing with the Govern¬ 
ment and denies them to those dealing with each other, 
there would be a violation of the privilegesjmd immu¬ 
nities guaranteed by the fifth amendment; (6) and 
that as it destroyed all standard of prices, it would 
constitute that criminal, and reached by guesses alone, 
upon which an enormous preponderance of men have 
always and are still guessing wrong; (7) that, as a 
large part of business payments are really for service, 
it would enslave men by compelling them to work for 
compensation not fixed by themselves; (8) that it cre¬ 
ates an undefined power of confiscation; (9) that it, by 
legislation would terminate the freedom of trade safe¬ 
guarded by the Constitution; and (10) that it really will 
establish Communism in the United States. Many 


56 DOES PRICE FIXING DESTROY LIBERTY? 

more reasons could be given, and be discussed in de¬ 
tail, but in a matter so plain, a general statement is 
deemed sufficient. 

The subject is simplified, however, by understand¬ 
ing certain fundamental conceptions of our law. In 
the first place, it has been settled for centuries, and in 
accordance with sound reasoning, that property really 
consists in the free enjoyment of its fruits. Lord Chief 
Justice Coke gives many illustrations of this primary 
principle. For example, this idea is so paramount that, 
as he points out: 49 “If a man seised of lands in fee 
“by his deed granteth to another the profit of those 
“lands, to have and to hold to him and his heires, and 
“maketh livery secundum forman chartae, the whole 
“land itselfe doth passe; for what is the land but the 
“profits thereof 

This, of course, being founded upon reason, re¬ 
mains our law today. Mr. Justice Clarke, delivering 
the opinion in Branson vs. Bush, 50 says: “But the 
“value of property results from the use to which it is 
“put, and varies with the profitableness of that use, 
“present and prospective, actual and anticipated. 
“There is no pecuniary value outside of that which re- 
“ suits from such use. The amount and profitable char- 
“acter of such use determines the value.” 

It is, of course, therefore, just as unconstitutional 
to take any part of the profits as it is to take any part 
of the commodity without just compensation. Upon 
this subject the Supreme Court, in treating of legis¬ 
lation providing that one man's property should be 
vested in another private person, says: 51 It “would, 

49 Littleton, 4 b. 

50 Branson vs. Bush, 251 U. S. 182 (see page 187). 1919. 

61 Chicago, Burlington, etc., R. R. Co. vs. Chicago, 166 U. S. 226 
(see page 235). 1897. 




THE CONSTITUTIONALITY OF THE ACT 


57 


“if effectual, deprive the former of his property with¬ 
out due process of law. * * * Such an enactment 
“would not receive judicial sanction in any country 
“having a written Constitution distributing the powers 
“of Government among three co-ordinate departments, 
“and committing to the judiciary, expressly or by im¬ 
plication, authority to enforce the provisions of such 
“Constitution. It would be treated not as an act of 
“legislative power, but as a sentence, an act of spolia- 
“tion . Due protection of the rights of property has 
“been regarded as a vital principle of Eepublican in¬ 
stitutions. ‘Next in degree to the right of personal 
“ ‘liberty * * * is the right of enjoying private 

“ ‘property without undue interference or molestation.’ 
‘ ‘ The requirement that the property shall not be taken 
“for public use without just compensation is but ‘an 
“ ‘affirmance of a great doctrine established by the 
“ ‘Common Law for the protection of private property. 
“ ‘It is founded in natural equity, and is laid down by 
“ ‘jurists as a principle of universal law. Indeed, in 
“ ‘a free Government, all other rights would become 
“ ‘worthless if the Government possessed an uncon- 
“ 1 trolled power over the private fortune of every citi- 
“ l zen: ” 

Another very valuable opinion in this connection 
is that of Mr. Justice Miller, in the case of Loan Assn, 
vs. Topeka, 52 and, quite recently in Smith vs. Texas, 5 * 
it is said: “Life, liberty, property, and the equal 
“protection of the law, grouped together in the Consti¬ 
tution, are so related that the deprivation of any one 
“of these separate and independent rights may lessen 
“or extinguish the value of the other three. In so far 

02 Loan Assn. vs. Topeka, 20 Wall. 655 (see pages 663-665). 
1875. 

63 Smith vs. Texas, 233 U. S. 630 (see page 636). 1914. 




58 


DOES PRICE FIXING DESTROY LIBERTY? 


“as a man is deprived of the right to labor, his liberty 
“is restricted, his capacity to earn wages and acquire 
“property is lessened, and he is denied the protection 
“which the law affords those who are permitted to 
“work. Liberty means more than freedom from servi¬ 
tude, and the Constitutional guarantee is an assur¬ 
ance that the citizen shall be protected in the right 
“to use his powers of mind and body in any lawful call- 
tug. 

The very late case of Adams vs. Tanner, 54 incor¬ 
porates in the law of the United States Shakespeare’s 
statement that: “You take my house when you do take 
“the prop that doth sustain my house; you take my life 
u when you do take the means whereby I live .” 

As the Supreme Court has so often insisted that, 
no matter how covered, it will seek out and be guided 
by realities, and that it is a primary duty to safeguard 
our present system of Republican Grovernment and 
freedom as against despotism, Communism and all 
other systems, it seems only necessary to refer again 
to the decisions already cited to show that, if the Act 
is to be wrongly interpreted, it must be unconstitu¬ 
tional as establishing the very spirit and principle of 
Communism in substituting Grovernmental price fix¬ 
ing for the liberty-preserving method of freedom and 
competition. 

It has been established that those things which tend 
to monopoly are illegal, because an invasion of free¬ 
dom; it has been established that the fruits of prop¬ 
erty are property itself, that, in taking them in whole 
or part, you take property; and the Fifth Amendment 
establishes that, even for public uses, property cannot 
be taken except by giving a just equivalent found by 


Adams vs. Tanner, 244 U. S. 590 (see page 593). 1917. 



THE CONSTITUTIONALITY OF THE ACT 59 

tlie Judicial Department of our government. All 
these are necessary to safeguard Liberty. 

If the Act be wrongly interpreted, plainly it would 
violate the Constitution by taking property for private 
use through some governmental agency, as no stand¬ 
ard is attempted to be given, by an ex post facto de¬ 
termination, put into effect after the vendor had made 
his guesses as best he could. Moreover, as has always 
been the case in such attempts against Liberty, it would 
terrorize those producers or sellers of necessaries (who 
are not exempted by the Act), by threats of punishment, 
cruel and despotic beyond reason. Treating of this 
subject, Professor Laughlin in his work on “Money 
and Prices’’ well says: 55 “It is a means of supple- 
“ men ting individual incapacity and want of success 
“by assessment upon efficient and successful members 
“of society. This is Socialism pure and simple. It is 
“following the tendency to look to the State for aid 
“when individual effort begins to be distasteful; it re- 
“ moves the incentive to industry from those weaklings 
“who need to know that success is not the fruit of idle¬ 
ness and shiftlessness. To let such as these feel that 
“their inefficiency may be condoned by the collective 
“efforts of society is to penalize thrift and put a 
“premium on failure. To legislate in favor of the in¬ 
efficient at the expense of the efficient is to put dem¬ 
agoguery on the throne and discourage the very quali¬ 
fies on which the stability and moral growth of so¬ 
ciety always have, and always must, depend. Think 
u of a civil polity which in the interest of one set of 
“ persons should undertake to regulate the prices of 
“goods in the country’s markets—whenever intemper- 
11 ate overtrading has been followed by a commercial 

55 Laughlin’s “Money and Prices,” Chap. VII (see pages 187 to 
192). 




60 DOES PRICE FIXING DESTROY LIBERTY? ^ 

“ crisis, or an abundant crop, and a small foreign de- 
“mand has lowered the price of wheat or cotton! If 
“we are to enter upon that path, it is well to know 
“whither it leads. One such step in Socialism leads 
“to another, and the outcome is the subversion of exist- 
“ing society. * * * Shall we accept dishonor, or 

“shall we disappear down the unknown path of So¬ 
cialism? One or the other must we choose, if the pub- 
“lic is pleased to occupy itself in the future with the 
“price question. * * * And so soon as the forces 

“operating on price are understood to be complex and 
“of a nature not to be interfered with by legislation, 
“we shall be freed from a dangerous agitation. * * * 
“sooner or later, the United States must face the in- 
“ evitable political issue between the socialistic and non- 
“ socialistic conceptions of Government. * * * It 

“was not merely the free coinage of silver, or the at¬ 
tacks upon the Supreme Court, which created an 
“epoch-making year in American politics, but it was 
“the first open appearance of a Socialistic theory of 
“Government, which happened to emerge in the guise 
“of the price question. * * * Whatever the spe- 

‘ ‘ cial issue, we shall have to cope with Socialistic forces 
“in one form or another.” 

On the same subject, Henry George, whom no one 
will accuse of ultra-conservatism, says, in his “Prog¬ 
ress and Poverty”: 56 “These are the substitution of 
“governmental direction for the play of individual 
“action, and the attempt to secure by restriction what 
“can better be secured by freedom. As to the truths 
“that are involved in socialistic ideas, I shall have 
“something to say hereafter; but it is evident that 
“whatever savors of regulation and restriction is in it- 
11 self bad .” 


66 Henry George’s “Progress and Poverty” (page 317). 



THE CONSTITUTIONALITY OF THE ACT 


61 


It is believed that there is no difference of opinion 
on this subject between Adam Smith, John Stuart Mill, 
or any of the other great masters of political thought. 

It must never be forgotten, also, that the reach of 
this question is universal. If the State can wrench 
the control of the prices of commodities from the hands 
of all the people exercising their inalienable right of 
pursuit through the means of free competition pursued 
at their free discretions, it is, of course, inevitably fix¬ 
ing the compensation for their services and labors. As 
Adam Smith has so clearly shown, in the case of sales of 
many commodities, recompense for labor is not only 
an important factor, but the predominating factor. 

It must not be forgotten, also, that the Supreme 
Court of the United States has, again and again, deter¬ 
mined that the freedom of pursuit is constitutionally 
protected, and is only subject to such limitation or reg¬ 
ulation by legislation as can be shown to be warranted 
by public welfare; and that there is no disagreement 
among those really well informed that such attempts at 
regulation are, on the contrary, pernicious to the last 
degree; that this has been not the result of mere the¬ 
orizing, but of the actual tests and experiences of cen¬ 
turies. That such attempts have resulted in unvary¬ 
ing failures, and have been abandoned, sometimes 
after the greatest suffering, and always after imper¬ 
illing Liberty herself. 

It is strange that, in view of these vital questions, 
practically all of the attention of the lower Courts, in 
respect to this Act, has been directed to but a single 
question relating to the “uncertainty ’’ of its pro¬ 
visions. This probably is the reason why there has been 
such a conflict of views between them; but, however 
that may be, the discussion of this phase of the Act 
throws so much light upon the question that it seems 
to merit the most careful examination. 










CHAPTER IY. 


The Uncertainty of the Act. 

The problem that is now to he dealt with is 
whether, there being a market price determined through 
the “higgling of the market,” there is the requisite 
data available to business men upon which, beyond any 
reasonable doubt, they can, as business men, determine 
just what deviation from such market price they should 
make to satisfy any judge and any jury that they had 
not acted criminally. In other words, to ascertain what 
any chance twelve men might think a proper variance 
from the “Market Price” —which is, of course, the re¬ 
corded judgment of all the rest of the world. 

To avoid confusion, it must be borne in mind that 
the “market price” is an ever-varying one, being de¬ 
termined only by a free market, where each one is en¬ 
titled, as a freeman, to offer what he pleases or to sell 
on terms satisfactory to himself. In other words, that 
it is the price constantly and ever being fixed, and thus 
meeting every variation and contingency necessary to 
be faced by men exercising the freedom of a democ¬ 
racy, instead of the bondage of communistic govern¬ 
ment. Grave error is made in assuming that it is ever 
a fixed price . It is every varying to meet all influences, 
and is simply the last price made in a free market. It 
is in reality, the price of freedom! 

Another preliminary consideration must not be 
lost sight of, and it is that, as every one wants to buy at 
the lowest prices, and sell at the highest, there is al¬ 
ways a perplexing political agitation going on to se- 
( 63 ) 


64 


DOES PRICE FIXING DESTROY LIBERTY? 


cure state aid either to boost or reduce prices by gov¬ 
ernmental action. This always results in agitations 
most dangerous to our institutions, and in favor of 
majorities, seeking their ends through unjust and arbi¬ 
trary power, as by inflating the currency, or penalizing 
those who use their inalienable right “to pursue their 
“own happiness,” obeying the law,— that is, of course, 
the Constitutional Law, —in an exercise of their own 
free discretion. The Courts have been fond of saying 
that they will not either make contracts for men, or 
assume the guardianship of competent adults. The 
legislative branch of government, unfortunately oft 
tries to thrust this task upon them. 

Further, it is practically impossible to obtain ab¬ 
solutely impartial juries in such cases. Who has ever 
heard of one charged with profiteering being acquitted 
where the shield of the Constitution was withdrawn 
by the Courts from his protection? Of course, a jury 
might be found, of such high timber, as to rise above 
all personal interest and prejudice, but it would be ex¬ 
ceptional, for as sellers are alone indicted and as in 
most instances juries must be composed of buyers 
(whose attitude of mind is picturesquely described ac¬ 
cording to the Scriptures as, “It is naught, it is naught, 
“saith the buyer, but when he is gone his way, then he 
“boasteth”: Proverbs, Chapter XX, Verse 14), called 
to pass upon the question whether they are to pay more 
or less for what they want and who are influenced by a 
strong public sentiment supporting them in endeavor¬ 
ing to make things cheap for everybody. Such a dis¬ 
position but really insures higher prices, as has been 
proven again and again, however little it may be re¬ 
alized for the time being by the masses of men. 

But “Nemo sihi esse judex vel suis jus dicere 


THE UNCERTAINTY OF THE ACT 


65 


“debet” 57 A fundamental principle of justice not de¬ 
parted from by the Roman Law, and long since declared 
in our own jurisprudence. “Nemo debet esse Judex in 
“propria sua Causa” 58 That the ablest Judges have 
always realized these difficulties in such cases is abund¬ 
antly shown, but nowhere better than in the opinion 
of Mr. Justice Holmes in the Northern Securities 
case: 09 “Great cases,” he says, “like hard cases make 
“bad law. For great cases are called great, not by 
“reason of their real importance in shaping the law 
“of the future, but because of some accident of immedi- 
“ate overwhelming interest which appeals to the feel- 
“ings and distorts the judgment. These immediate in¬ 
terests exercise a kind of hydraulic pressure which 
“makes what previously was clear seem doubtful, and 
“before which even well-settled principles of law will 
“bend. What we have to do in this case is to find the 
“meaning of some not very difficult words. We must 
“try, I have tried, to do it with the same freedom of 
“natural and spontaneous interpretation that one 
“would be sure of if the same question arose upon an 
“indictment or a similar act which excited no public 
“attention, and was of importance only to a prisoner 
“before the Court.” 

Indeed, when the principle of universal justice, 
stated in these foregoing maxims, is applied to the 
“erroneous” interpretation of the Lever Act, the most 
inconceivable results instantly appear. The Grovern- 
ment makes no provision whatever to instruct those 

57 The maxims that “no man ought to be his own judge, or to 
administer justice in cases where his relations are concerned,” and 
“No one should be judge in his own cause” are repeatedly found in 
the decisions of all our courts. 

58 Id. 

69 Northern Securities Co. vs. United States, 193 U. S. 197 (see 
page 400). 1904. 



66 


DOES PRICE FIXING DESTROY LIBERTY? 


engaged in business as to what they are or are not to 
charge for their commodities. Indeed it, in fact, con¬ 
stitutes the dealers the governmental agents to deter¬ 
mine the proper price for commodities both for them¬ 
selves, and for the public, with its adverse interest, 
despite the fact that such dealers have not only a con¬ 
tinuing interest, but, very often, a trust duty to others, 
to make the business that they are transacting as suc¬ 
cessful as possible. The Act intensifies the violation 
of these maxims by providing that, in turn, such 
dealers are to be judged in a criminal proceeding by a 
jury drawn from those having the conflicting interest! 
In a word, the Act insists upon a satisfactory result 
from biased minds, to be determined by other minds 
equally biased to the contrary, and provides, upon the 
question of prices, no method of test or appeal to a 
proper judicial tribunal from that which constitutes a 
legislative determination, except where actual cases for 
punishment for possible error in price fixing are before 
the Court. 

The contention, therefore, must be that men can 
be convicted of crime by juries in larger part of ad¬ 
verse interest, solely for being compelled to reach con¬ 
clusions, under the duress of otherwise abandoning 
their means of livelihood, in cases where, both under 
divine and civil law, they have heretofore universally 
been precluded from decision at all because from 
natural human infirmity they are incapable of satisfac¬ 
tory performance. 

For the law positively to declare that “no man can 
“serve two masters ” and then not only to force him 
to do so, but put him in prison because he has not done 
so satisfactorily, and to pass judgment upon him by 
the verdict of a body of men also, subject to the dis¬ 
abilities of personal interest,—cannot be a portion of 


THE UNCERTAINTY OF THE ACT 


67 


our splendid system of justice, buttressed by the Con¬ 
stitution and always safeguarded by Judges whose 
highest duty is its preservation. 

But men cannot be punished for their ordinary 
human limitations. That the Harvester case fully 
determines. But, beyond this, nothing is better set¬ 
tled than that they cannot be punished where con¬ 
fiscatory interference with property is concerned, ex¬ 
cept when they have a clearly expressed method of 
judicial determination plainly provided for their pro¬ 
tection. This has been so often expressed that but a 
short reference to the authorities is adequate. It is 
a right that cannot be lost by uncertainty or obscurity. 
Men cannot lose it by a statute that makes them guess 
at a possibility of its exercise, or where the opportunity 
consists only as a defense to any application or pro¬ 
ceeding for their punishment. This is well covered in 
the very recent cases of Ohio, etc., Water Co. vs. 
Ben Avon Borough, 60 and Oklahoma vs. Love. 61 In 
the latter case the defendant was, by a State Com¬ 
mission, acting under a statute, prohibited from 
establishing rates higher than those prevailing in 
1913, for laundry work in Oklahoma City. Pro¬ 
ceedings were taken for the violation of the orders 
of the State Commission. It was provided that for dis¬ 
obedience of such orders there was to be a fine imposed, 
as for a contempt, of not exceeding five hundred dol¬ 
lars a day. Mr. Justice Brandeis, speaking for the 
whole court, says: 62 “So it appears that the only ju¬ 
dicial review of an order fixing rates possible under 

60 Ohio, etc.. Water Co., vs. Ben Avon Borough. Decided by 
the Supreme Court June i, 1920. Not yet reported. 

61 The Oklahoma Operating Co. vs. Love. Decided by the Su¬ 
preme Court, March 22, 1920. Not yet reported. 

62 In Oklahoma Operating Co. vs. Love. Id. 



68 DOES PRICE FIXING DESTROY LIBERTY? 

“the laws of the State was that arising in proceed- 
“ings to punish for contempt. * * * By boldly vio- 
“lating an order a party against whom it was directed 
“may provoke a complaint; and if the complaint re- 
“ suits in a citation to show cause why he should not 
“be punished for contempt, he may justify before the 
“Commission by showing that the order violated was 
“invalid, unjust or unreasonable. If he fails to satisfy 
“the Commission that it erred in this respect, a judicial 
“review is open to him by way of appeal on the whole 
“record to the Supreme Court. But the penalties, 
“which may possibly be imposed, if he pursues this 
“ course without success, are such as might well deter 
u even the boldest and most confident. The penalty for 
“refusal to obey an order may be five hundred dollars. 
“* * * Obviously a judicial review beset by such 

“deterrents does not satisfy the constitutional require- 
“ments, even if otherwise adequate, and therefore the 
“provisions of the Acts relating to the enforcement of 
“the rates by penalties are unconstitutional, without 
“regard to the question of the insufficiency of those 
“rates.” 

Of course, under the Lever Act, a man with a large 
business might, for errors of judgment resulting from 
being forced to decide matters that the law has always 
insisted he cannot be expected to decide properly, suf¬ 
fer endless imprisonment and fines impossible of pay¬ 
ment. 

In the Ohio case, Mr. Justice McReynolds again 
says: 63 “We are unable to say that Section 31 6Sa offered 

63 Ohio, etc., Water Co., vs. Ben Avon Borough, United States 
Supreme Court, June, 1920. Not yet reported. 

63a Referring to a section of the Public Service Company Law 
of Pennsylvania which provides that no injunction shall issue to 
modify or suspend an order of the Commission, except upon com¬ 
pliance with a certain procedure for judicial review of the Order. 



THE UNCERTAINTY OF THE ACT 


69 


“an opportunity to test the order so clear and definite 
“that plaintiff in error was obliged to proceed there¬ 
under or suffer loss of rights guaranteed by the Fed- 
“ era! Constitution. * * * Without doubt the duties 
“of the Courts upon appeals under the Act are judicial 
“in character—not legislative. * * * This is not dis¬ 
puted; but their jurisdiction * * * stopped short 
“of what must be plainly intrusted to some Court, in 
“order that there may be due process of law” 

In commodity cases, where prices, of necessity, 
vary from minute to minute, the decision of one day 
must be totally inadequate for the next day’s prices; 
and, as there is nothing in the Act by which anyone 
can obtain relief until after he has acted, at his peril, 
it is impossible to see how one can have proper consti¬ 
tutional protection under its provisions. Indeed, upon 
general principles of jurisprudence, has it not always 
been the law that men, forced to reach conclusions, 
must be kept free from even the possibility of civil, 
much less criminal liability, for error in the conclusions 
that they may reach 1 ? 

And, if this be so, is it not inconceivable that the 
Legislature could have intended, or that it would con¬ 
stitute due process of law, even did it so intend, to 
enact that men were to be criminally punished, under 
circumstances and for acts of which, the law has always 
declared, they could not properly judge or expect to 
attain correct results; and in a class of cases, where 
the matters involved were of the most speculative and 
difficult character t Indeed, even of a much more diffi¬ 
cult (if not of an impossible) nature than those utility 
cases of which the Court treated. “In determining 

The Court held that the section in question did not make adequate 
provision for testing judicially an order of the Commission alleged 
to be confiscatory. 



70 DOES PRICE FIXING DESTROY LIBERTY? 

“what is due process of law, regard must be had to 
“substance not to form. * * * ‘Can a State make 
“anything due process of law which, by its own legis¬ 
lation, it chooses to declare such? To affirm this is 
“to hold that the prohibition to the States is of no 
“avail, or has no application where the invasion of 
“private rights is effected under the forms of State 
“ legislation/ ” 64 

It cannot be believed that the Courts will ever per¬ 
mit that those, upon whose success and prosperity the 
revenues and welfare of the nation must depend, should 
be subjected to treatment that no court of justice 
would for a moment, permit to be inflicted upon itself 
under like circumstances,—the vital principle, of 
course, governing all such cases is that the State can¬ 
not force the duty of judgment upon those whose 
minds it shackles with the fears of danger and with 
threats of harm. It is no answer in such cases to say 
that the matter so constantly varies that the State can¬ 
not give a fixed rule, for if this be the case, as it is, that 
simply proves that the attempt is unlawful and op¬ 
pressive. “Lex non cogit ad impossibilia.” 65 

This subject well illustrates the point that many 
business men may rightly feel they are being unjustly 
treated under the threatening provisions of the Act, 
and yet have difficulty in formulating exactly of what 
the injustice consists. The crux of the matter lies 
largely in that very principle upon which the writer 
has sought to lay the greatest emphasis, and it is that 
the law should not require of a man the performance of 
a duty which by reason of the uncertainties of its con¬ 
ditions, the infallibility of human understanding, and 

61 Chicago R. R. Co., etc., vs. Chicago, 166 U. S. 226 (see page 
235)- 1897. 

65 Coke on Litt., 231 b. 



THE UNCERTAINTY OF THE ACT 71 

the ever present elements of bias and self-interest, it 
is not possible for him to discharge with absolute pre¬ 
cision, and then to punish him for errors which un¬ 
wittingly he might make. It would be as extreme to 
maintain that a jury, a judge, or any extra-judicial 
body should be held to the strict accountability of abso¬ 
lute accuracy in all of their conclusions. It is not 
proper for the Act to make the dealer the judge as to 
when prices are reasonable, fair and not excessive, and 
then to punish him for error in the judgments at which 
he arrives. For instance, the Interstate Commerce 
Commission, necessarily upon the most unsatisfactory 
and speculative data, has had to pass its judgment in 
rate cases on so difficult a basis that it has resulted in 
errors of millions of dollars, so it has been asserted. 
What could be said of a law that would contemplate 
that the conclusions of the Commission should be above 
and beyond all error, or otherwise its members held to 
a ruinous responsibility f 

As was also said in the Sparf case: 66 “I do con¬ 
sider that this power and corresponding duty of the 
“Court, authoritatively to declare the law, is one of 
“the highest safeguards of the citizen. The sole end 
“of courts of justice is to enforce the laws uniformly 
“and impartially, without respect of persons or times 
“or the opinions of men. To enforce popular laws is 
“easy. But when an unpopular cause is a just cause; 
“when a law, unpopular in some locality, is to be en- 
“ forced, there then comes the strain upon the admin- 
“istration of justice; and few unprejudiced men would 
“hesitate as to where that strain would be most firmly 
“borne A statement of fact and of law well appli¬ 
cable to the matters under discussion. 

The first cases arising under the Act which have 


88 Sparf vs. United States, 156 U. S. 51 (see page 107). 1895. 



72 


DOES PRICE FIXING DESTROY LIBERTY? 


been reported,—United States vs. Spokane Co ., 07 
United States vs. Cohen , 68 United States vs. Myatt , 69 
and Weed & Co. vs. Lockwood, 70 —show that the 


® 7 In United States vs. Spokane Dry Goods Company, 264 Fed. 
Rep. 209, 1920, the defendant was indicted for making an unjust and 
unreasonable charge in dealing in wearing apparel in the City of 
Spokane. It was contended by the Government that the defendant 
had sold such apparel at an average profit of 118% based on the 
cost price. The defendant demurred to the indictment on the 
ground that the Act was invalid, as being too uncertain a definition 
of crime. District Judge Rudkin overruled the demurrer, upon the 
ground principally that the Act was not void for uncertainty and 
the War power of Congress was sufficient to sustain the constitu¬ 
tionality of the Act. 

68 In United States vs. Cohen Company, 264 Fed. Rep. 218, 
1920, which arose in the District Court of Missouri, the defendant 
was indicted for making an unreasonable charge in dealing in sugar. 
A demurrer was interposed to the indictment and sustained by the 
Court in an opinion by District Judge Faris, upon the ground that 
the Lever Act, though within the War power of Congress, did not 
define the offenses which it covered, with sufficient certainty that 
the accused would be informed of the nature and cause of the accu¬ 
sation, and was in consequence, void under Amendment Six of the 
Constitution. 

69 The case of United States vs. Myatt, 264 Fed. Rep. 442, 1920, 
arose in the District Court of North Carolina and was a prosecution 
brought against the defendant as a retail grocer for selling sugar at 
an unreasonable profit. The defendant bought it for ten cents per 
pound and sold for fourteen cents per pound. On motion to quash 
the indictment the Court in an opinion by District Judge Conner 
ruled that the motion should be denied and the defendant plead to 
the bill and stand trial upon the issue of the reasonableness of the 
charges made by him. 

70 In Weed & Company vs. Lockwood, 264 Fed. Rep. 453, 1920, 
indictments against the defendants, who were engaged in the clothing 
business, were returned in the District Court for the Western Dis¬ 
trict of New York, for selling wearing apparel at unreasonable and 
unjust prices. The defendants instituted suits in equity against 
Lockwood, the United States District Attorney, to enjoin him from 
proceeding in the criminal actions until the constitutionality of the 
Lever Act could be determined. The bills set up that the Act was 
unconstitutional upon the ground that it violated the Fifth Amend¬ 
ment in confiscating property rights of individuals, and that it also 
was void for uncertainty. The District Court in an opinion by 
Judge Hazel, refused the injunction, holding that the indictments 
were not invalid as the Lever Act was constitutional. On appeal to 
the United States Circuit Court of Appeals for the Second Circuit, 





THE UNCERTAINTY OF THE ACT 


73 


Courts have perceived the difficulties of the situa¬ 
tion, although they have reached diametrically opposed 
conclusions. A careful reading of these cases, how¬ 
ever, shows that Mr. Justice Holmes’ direction as ex¬ 
pressed in the Harvester case to give due consideration 
to the political economy of the circumstances was not 
given equal attention. This, it is submitted, caused 
the varying results reached in their opinions. 

All Judges again express their indignation at the 
so-called “profiteers.” Judge Faris, in the Cohen case, 
however, rising above it, whilst Judge Rudkin in 
United States vs. Spokane Co. feels the evil so great 
that he must aid in the supposed remedy, thinking there 
was no other cure than by way of government interfer¬ 
ence. The latter observes: 71 “I will only add in con- 
“ elusion, that the situation confronting Congress was 
“a difficult one at best. To fix profits definitely and 
“arbitrarily, without reference to place or circum¬ 
stance, would prove unjust and oppressive in the ex¬ 
treme, for it is matter of common knowledge that 
“what would be deemed a just and reasonable profit 
“in one place or as to one commodity would be unjust 
“and unreasonable in another place or as to a different 
“commodity. Congress was, therefore, compelled to 
“choose between the course pursued and some other 
“course equally difficult.” He then points out facts 
which simply prove nothing, if the economics of 
the subject be fully understood, that is.—that there 
was a difference of over one hundred per cent. 


the decree of the District Court was affirmed in an opinion (not 
yet reported) by Judge Manton, concurred in by Judges Ward and 
Hough. The opinion, on appeal, sustained the Act principally on 
the ground that it was a war measure and further that it was not 
void for uncertainty, or arbitrary in its exemptions. 

71 Judge Rudkin in United States vs. Spokane Company, 264 
Fed. Rep. 209 (see page 217). 1920. 



74 


DOES PRICE FIXING DESTROY LIBERTY? 


between the selling price and the cost price. Judge 
Rudkin then continues: 72 “That such prices or profits 
“are extortionate no one will deny. Of course, if con- 
“ fined to the three stores in question, or to only a few 
“stores, the people have a remedy in their own hands 
“by withholding their patronage, and, if they fail to 
“make use of that remedy, to the fullest extent, they, 
“alone, are to blame. On the other hand, if these con¬ 
ditions are general, and to continue indefinitely, the 
“people are without remedy, except through govern- 
“mental action.” This finding, of course, is error, as 
the people not only always have a remedy, but in fact 
the sole, effective and beneficial remedy. 

Indeed, it is an astounding fact that whilst there 
is marked disagreement, a most clearly expressed 
doubt, a reference to mere “War power” as the most 
relied upon support of the Act, there is a universal 
failure in these decisions to regard Mr. Justice 
Holmes’ admonition as to the necessity of examining 
these questions from the viewpoint of political econom¬ 
ists as well as of lawyers. There is not a line to be 
found in these cases under the Act to show the slight¬ 
est recognition of the definitely established truth, that 
high prices always have been, and always will be, the 
forerunner of low prices; that freemen in a free mar¬ 
ket, with its inducements to gain the higher rewards, 
strive, invent and compete, so that every temporary 
rise in price insures not merely a return to the old 
price, hut to a lower one, and finally to the fair and 
equitable exchange of all commodities, measured by 
the labor relatively involved. No Court even notices 
the different burden of proof in quasi-monopolistic en¬ 
terprises, and where the free exchange of commodities 

72 United States vs. Spokane Co., 264 Fed. Rep. 209 (see page 
217). 1920. 




THE UNCERTAINTY OF THE ACT 75 

is involved; not a single one notices the established 
truth that continuing trade is but composed of 
repeated cycles of barter, of repeated exchanges of 
goods for goods, in which money but aids the revolu¬ 
tion, and is in no case the substance of either step; no 
one considers that money itself is often more widely 
fluctuating than goods, and that in such universal ad¬ 
vance of commodities we have only a demonstration of 
the enormous fall of money resulting from the methods 
of financing the war; all of the lower Courts seem to 
have the greatest difficulty in distinguishing the Nash 
and Harvester cases, and no one has attempted to show, 
as not only is the case but as is so clearly shown by the 
Supreme Court itself, how absolutely right these cases 
are, and how necessary for the preservation not only 
of the Constitution and the administration of justice, 
but even for the protection of Liberty herself! No 
decision follows the rules adopted by the Supreme 
Court relative to the construction and implied repeals 
of statutory and common law T . All of them simply 
assume that it was the purpose of these three words, 72 * 
to undo not merely all the work of the Supreme Court 
since its beginning, but even that of the Common Law 
for nearly a thousand years. Not one seeks to know 
why sugar is now selling at sixteen to twenty cents a 
pound in this time of great scarcity, when in times 
passed, its normal price always exceeded one dollar. 
None seeks what Liberty has done for us, nor what we 
must do for Liberty, if she is to continue to heap her 
blessings upon us, a measure of blessings that she can 
alone insure. 

Though some of them mention proofs that may be 
offered juries; there is nowhere taken into considera- 
72a The words in the Act—“unjust,” “unreasonable” and “ex¬ 


cessive. 



76 


DOES PRICE FIXING DESTROY LIBERTY? 


tion the controlling factors of “insurance,” “business 
risk” and “replacement”; nor how these are affected 
by our greatly depreciated money and our enormous and 
fluctuating burdens of taxation. None has observed 
that under some of the indictments, what is really 
being attempted, is to force merchants to exchange, 
perhaps, two pounds of their stock for one pound, 
under a threat of ruin and jail, for failing to assume 
the risks of doing so. 

In these cases there is next met the “official war” 
argument. And see its results! In the only decision 
under the Act in a Circuit Court of Appeals, 73 as able 
a Circuit Judge 74 as sits frankly says: “If we were 
“in a state of ‘official’ peace, this statute would, in my 
“judgment, be unconstitutional under International 
“Harvester Co. vs. Kentucky, 234 United States 216; 
“the condemnation there express especially page 223, 
“is applicable here word for word. * * * But the 
“statute is begotten by war” 

But how can even a real tear, much less a mere 
“official” war, repeal the Constitution, turn to ashes 
the decisions of the Supreme Court, itself, as to what 
is unconstitutional? That is nowhere explained. 

Has not the Supreme Court gloriously laid down a 
never-questioned doctrine: 75 * * * “the principles of 
“constitutional liberty would be in peril, unless estab¬ 
lished, by irrepealable law? * * * The Constitution of 
“the United States is a law for rulers and people, 
“ equally in war and in peace, and covers with the shield 
“of its protection all classes of men, at all times, and 
“under all circumstances. No doctrine involving more 
“pernicious consequences, was ever invented by the art 

73 Weed & Co. vs. Lockwood (United States Circuit Court of 
Appeals, for Second Circuit. Not yet reported.) 

74 Judge Hough of the Second Circuit. 

75 Ex parte Milligan, 4 Wall. 2 (see page 120). 1866. 




THE UNCERTAINTY OF THE ACT 


77 


“of man than that any of its provisions can be sus¬ 
pended during any of the great exigencies of govern- 
“ment. Such a doctrine leads directly to anarchy or 
“despotism 

It is also said, in the recent “war-time prohibition” 
case of Hamilton vs. Kentucky Distilleries Co .: 76 
“The war power of the United States like its other 
“powers and like the police power of the States is sub- 
“ject to applicable constitutional limitations.” 

But the learned Justice 77 holds that, beyond doubt, 
two “applicable constitutional limitations” having 
been determined by the Supreme Court itself, a viola¬ 
tion of them is “justified” by a power, which, the Su¬ 
preme Court has distinctly and repeatedly said, was 
subject to such limitations . 78 That cannot be! 

Now let us examine just what this would mean, if 
that hereinbefore stated be correct. 

By this mysterious power, three words “unjust,” 
“unreasonable” and “excessive” would repeal by mere 
implication all rules of interpretation, the whole policy 
of the Common Law, and the work of the Supreme Court 
for years upon this subject; it would justify admitted 
invasions of the Constitution; it would nullify the 
economic truth that the only cures for scarcity are de¬ 
creased consumption and increased production, and the 
only thing that assures both, is free competition, in an 
open market. It has established the doctrine that the 
way to obtain large home supplies is to prevent the 

76 Hamilton vs. Kentucky Distilleries & Warehouse Co., 251 
U. S. 146. December 15, 1919. 

77 Justice Brandeis in Hamilton vs. Distilleries Co., Id. 

78 The Supreme Court decided in the Hamilton case that under 
the expressed and implied war powers of Congress, the use and dis¬ 
position of private property could be restricted without making com¬ 
pensation and without due process of law, as guaranteed by the 
Fifth Amendment to the Constitution, contrary to the long-estab¬ 
lished decisions of the same Court that the war power was subject 
to the limitations of the Fifth Amendment. 



78 


DOES PRICE FIXING DESTROY LIBERTY? 


workings of sound economic law to further enlarging 
home production, and thus secure independence, 
and an average of low prices; whilst, at the same 
time, our foreign competitors, under the law of free¬ 
dom, are gaining the power to still further con¬ 
trol our markets. It has established that a power 
existing only for self-protection, can contrary to 
the Constitution, be turned into a power for the 
destruction of our industries. And the most astonish¬ 
ing contention as to this power, is that it can be 
used to ruin men for not having mental powers, 
beyond the capacity of mortal men. For, hereafter, 
they must know in advance, even in periods of 
extraordinary governmental extravagance just what 
are to be governmental exactions; in times of exag¬ 
gerated uncertainty they must measure even beyond 
any reasonable doubt the fluctuations and future in¬ 
flation of the currency, th,e future result of future 
years,—how much and when inflated prices will col¬ 
lapse, to what degree “replacement” must and will take 
place, the varying efficiency of labor, all changes in 
costs, in interest, in freight rates, and every other item 
involved in doing business; how will occur all con¬ 
tingencies such as wars, strikes, disorders, droughts, 
floods, embargoes and transportation difficulties; they 
must, in a word, do what men in larger measure, ever 
have been striving and ever failing to do. 

As this can never be done in the case of commodi¬ 
ties, beyond a reasonable doubt, this “war power” 
must, in times of stress, make legal the absurdity of 
attempting to aid the nation, by punishing its business 
men for what always must be mere guessing; and seek 
to impair their efficiency and patriotism by keeping 
them in constant anxiety lest wdiat they have to “guess 
at” may seem to be wrong to others, also guessing, but 
having less knowledge. Such guesses, business men 


THE UNCERTAINTY OF THE ACT 79 

know, are, in a great majority of cases, sure to be wrong 
even to the point of their ruin! 

As the Nash 79 and Harvester 80 cases show, such 
is not the law. That which can be measured by rea¬ 
sonable men, with ordinary daily experience, and upon 
proper evidence, can be and must be so measured “in 
“many instances,’’ as Mr. Justice Holmes terms it in 
the Nash case; that which all men know can, in vital 
particulars, at best be the subject only of surmise, spec¬ 
ulation, or guess, cannot be made' the basis of any juri¬ 
dical decision; much less could it be the basis of 
a verdict at the time of decision known beyond 
all or “any reasonable doubt.” If men can be 
“guessed” out of Life, Liberty and Property, they will 
but live under a tyrannical depotism,—certainly not 
under the constitutional protections of a free country. 
Should the contrary of the Harvester decision ever be 
established in our land, it could not be for long, for 
economic reasons would make it impossible; neverthe¬ 
less, it would be a first and dangerous step toward the 
final destruction of the Republic. This is proven by 
all history. 

As will be shown later, political economists agree 
that where the rise of commodities is general, it but 
indicates a depreciation in the value of money ,—I 
mean its real value,—that is, the amount of other com¬ 
modities into which it can be converted. Judge Rud¬ 
kin, in the Spokane case, notwithstanding his indigna¬ 
tion at profiteering, observes that it is the people’s 
own fault if they go to high-price stores, where there 
is not a general rise—that in such cases there is no 
occasion for relief. Of course, his greatest economic 

79 Nash vs. United States, 229 U. S. 373. 1913. 

80 International Harvester Co. vs. Kentucky, 234 U. S. 216. 


1914. 



80 


DOES PRICE FIXING DESTROY LIBERTY? 


mistake is in thinking it possible that there is no relief 
except by a liberty-destroying governmental interfer¬ 
ence. Every Political Economist knows that—except 
under monopolistic conditions—Freedom herself not 
only brings relief, meting out a proper punishment, if 
any punishment be deserved, but brings the only relief 
that, throughout the centuries, has ever proved effect¬ 
ive. Chains and penalties but enhance prices to give the 
necessary inducement to face ignominy and danger. 

The Spokane Company case 81 affords another 
illustration of the impossibility of enforcing such a 
law except through injustice and short cuts. No ade¬ 
quate investigation of unjust, unreasonable and exces¬ 
sive prices can really be had; that a man bought at one 
price and sold at another, proves nothing in reference 
to prices. So far as observation goes, it has been 
the method universally adopted to establish in the cases 
before the court alleged profiteering. 

Judge Rudkin seems as well to have misunder¬ 
stood Mr. Justice Holmes’ very valuable and clear 

81 United States vs. Spokane Co., 264 Fed. Rep. 209. 1920. 

82 Nash vs. United States, 229 U. S. 373, 1913, was a proceed¬ 
ing under the criminal sections of the Sherman Act. Nash, the 
president of the American Naval Stores Company, was indicted, 
together with other officials of the company, for alleged acts in 
restraint of trade dealing in turpentine and rosin. It was charged 
that the defendants bid down the price of the products so that com¬ 
petitors would be forced to sell at ruinous prices only, circulated 
false statements as to production and stocks on hand, established 
“closed ports” for purchasing, made tentative offers of large stores 
of the products to depress the market, fixed the price below the cost 
of production to drive competitors out of business, issued false 
warehouse receipts for turpentine and rosin, and were guilty of 
numeous other acts to accomplish the purpose stated. The defense 
was that the statute was so vague as to be inoperative on its crim¬ 
inal side, that the acts and things would not have constituted an 
offense if they had been done, and that such acts were too vaguely 
charged in the indictment. The Court, against the contentions of. 
Nash, held that there was no constitutional difficulty in the way of 
enforcing the criminal part of the act, that the acts alleged if done 







THE UNCERTAINTY OF THE ACT 81 

opinion in the Nash case , 82 as that in the Harvester case 83 
two cases perfectly in accord, and both stating prin¬ 
ciples without which the law could not be administered. 
On the other hand Judge Faris, reaching, no doubt, a 
correct conclusion, by not being so misled, had he also 
considered the economic side of the matter, would not 
have required so much fortitude in arriving at the con¬ 
clusion he did. 

The sole distinction between the Nash and Har¬ 
vester cases is the very simple distinction between the 
possible and the impossible, —between those things 
which can best be determined by juries and those which 
cannot be certainly defined by anybody—matters cover¬ 
ing so broad a ground as to require the judgment of all 
men acting with a free and untrammeled use of their 
judgments ,—and which, even with this great aid, con¬ 
stantly leads to grave error. In many things, men must 
act upon standards of the reasonable conduct of the av¬ 
erage man under the same, or nearly like circumstances; 
and the average jury is, of course, the tribunal best 
adapted to ascertain such standards. But even in such 
cases, there must be evidence adequate to justify a 
jury’s passing upon such matters. Nothing is to be 
left to mere surmise. Even in civil cases the jury will 
not be permitted to make a finding, where any essential 
fact is left to guess work. If it be proven that a man 
drove a car through a crowded street at one hundred 
miles an hour, it is perfectly reasonable for a jury to 
find that a reasonable man would not so act,—that there 

by intent would convert what on their face might be no more than 
ordinary acts of competition or the small dishonesties of trade into 
a conspiracy of the wider scope, and that the counts in the indict¬ 
ment were not bad for uncertainty. But the judgment on the con¬ 
viction of Nash and others was reversed by the Supreme Court 
because of errors in the instructions of the trial Court to the jury. 

83 International Harvester Co. vs. Kentucky. See statement of 
the facts of the case, supra. Note n, page 18. 



82 DOES PRICE FIXING DESTROY LIBERTY? 

was a violation of ordinary care and public duty. But 
if it were proven only that some person had so done, 
without proper evidence that it was the defendant, or 
if any of the essential facts necessary to establish the 
offense were lacking, no jury would be allowed by the 
Court to guess it out. Justice Holmes undoubtedly had 
this thought in mind when he said, in the Nash case : 83a 
“The law is full of instances where a man’s fate de- 
“pends on his estimating rightly that is, as the jury sub¬ 
sequently estimates it, some matter of degree. * * * 
“An act causing death may be murder, manslaughter, 
“or misadventure, according to the degree of danger at¬ 
tending it.’ But this is, of course, to be reached “~by 
“common experience in the circumstances known to the 
“ actor” 

To argue that these words of Justice Holmes meant 
anything except what he said,—that where men knew 
only part of the essential facts that would in the future 
surround the performance of the second half of the cycle 
called “trade,” they could be punished under ex post 
facto laws and upon guesses; and where these unknown 
or unknowable facts were to be measured by a common 
experience that, for centuries, has had no existence, 
except that which was directly the opposite. It is be¬ 
yond sound reason. 

The common experience as to ordinary commodi¬ 
ties has been through competition in a fair market, for 
all other methods have not merely been tried but have 
always failed. It needs no argument beyond the mere 
statement, therefore, that Justice Holmes, in saying 
“that the law is full of instances” meant either by 
“full” that there were no exceptions, or that he ex¬ 
pressly confined these cases to those where the circum¬ 
stances, without limitation, were known and could be 


83a Nash vs. United States, 229 U. S. 373 (see page 377). 1913. 



THE UNCERTAINTY OF THE ACT 83 

judged by past instances forming a common experience. 
It certainly did not mean, as has been said, that where 
a man was indicted for manslaughter for driving reck¬ 
lessly through a crowded street, he could be convicted 
upon guesses by the jury as to whether he was even 
there. It cannot possibly be argued that because mat¬ 
ters are left to juries in cases where from experience 
they are the best judges,—where all essential facts to be 
placed before them are known,—that necessarily it fol¬ 
lows they are to be permitted for the first time to guess 
men into jail in cases where the facts are not known 
or cannot be ascertained. To argue that because, in 
many instances “common experience” enables men to 
make reasonable findings, men should be permitted to 
find where “common experience” has demonstrated 
their inability to do so, needs no reply. 

In the Harvester case the indictment was for 
the enhancement above real value and at a price 
in excess of real value; and, to give this some 
color of reasonableness, the real value was declared to 
be “its market value under fair competition and under 
“normal market conditions”; but, as Mr. Justice 
Holmes ably says: 84 “We have to consider whether 
“in application this is more than an illusory form of 
“words, when, nine years after it was incorporated, a 
“combination invited by the law is required to guess 
“at its peril tvhat its product would have sold for, if 
“the combination had not existed, and nothing else 
“violently affecting values had occurred. * * * 

“Value is the effect in exchange of the relative social 
“desires for compared objects expressed in terms of 
“a common denominator. It is a fact and generally is 
“more or less easy to ascertain. But what it would 

84 International Harvester Co. vs. Kentucky, 234 U. S. 216 (see 
page 222). 1914. 




84 


DOES PRICE FIXING DESTROY LIBERTY? 


“be with such increase of a never extinguished compe¬ 
tition as it might be guessed would have existed * * * 
“with exclusion of the actual effect of other abnormal 
“ influences, * * * is a problem that no human in- 
“genuity could solve. The reason is not the general 
“uncertainties of a jury trial, but that the elements 
“necessary to determine the imaginary ideal are un- 
“ certain both in nature and degree of effect to the 
“acutest commercial mind. The very community, the 
“intensity of whose wish relatively to its other com¬ 
peting desires determines the price that it would give, 
“has to be supposed differently organized and subject 
“to other influences than those under which it acts.” 
Turning to the Nash case, the learned Justice con¬ 
tinues : 85 “ That deals with the actual, not with an 
“imaginary condition other than the fact. * * * 
“But if business is to go on, men must unite to do it 
“and must sell their wares. To compel them to guess 
“on peril of indictment what the community would 
“have given for them if the continually changing con- 
“ditions were other than they are, to an uncertain ex- 
“tent; to divine prophetically what the reaction of only 
“partially determinate facts would be upon the imag- 
“inations and desires of purchasers, is to exact gifts 
“that mankind does not possess.” 

This case has been again and again followed by the 
Supreme Court, as is seen in the Collins case , 86 in the 
Malone case , 87 and in United States vs. Pennsylvania 
Railroad Co . 88 As Mr. Justice Hughes pointed out in 
the Collins case , 89 a man is not bound to determine his 

85 International Harvester Co. vs. Kentucky, 234 U. S. 216 

(see page 222). 1914. 

86 Collins vs. Kentucky, 234 U. S. 634 (see page 638). 1914. 

87 Malone vs. Kentucky, 234 U. S. 639. 1914. 

88 United States vs. Penna. R. R. Co., 242 U. S. 208 (see page 
237). 1916. 

89 Collins vs. Kentucky, 234 U. S. 634 (see page 638). 1914. 



THE UNCERTAINTY OF THE ACT 


85 


conduct apart from the actualities of life, or by refer¬ 
ence to unknowable criteria, or by speculating upon 
imaginary conditions, or by conjecture ;—that state¬ 
ment seems so absolutely to dispose of the matter as 
clearly as well-expressed words can do it. To those 
who understand that continuing trade consists of a 
never-ending succession of half steps, that must always 
be largely worked out through future and unknowable 
conditions, there should be no difficulty. 

If this need further fortification, exactly the same 
result was reached in the law of England by the Court 
of Appeals and the House of Lords in the celebrated 
and highly commended decision of Mogul Steamship 
Co. vs. McGregor. 90 The exact distinction is made in 
this case that our own Supreme Court enforced in the 
Harvester and Nash cases. It will be remembered how 
strongly this case has been commended by the Supreme 
Court of the United States in the Standard Oil Case. 91 
“After all,” as Chief Justice White says, “this was but 
“an instinctive recognition of the truisms that the 
“ course of trade could not be made free by obstructing 
“it, and that an individual’s right to trade could not 
“be protected by destroying such right. * * * The 

‘ ‘ scope and effect of this freedom to trade and contract 
“is clearly shown by the decision in Mogul Steamship 
“Co. vs. McGregor.” 

The ever memorable opinion of Lord Bowen, in 
the Mogul case, has exactly the reasoning of Mr. Jus¬ 
tice Holmes in the Nash and Harvester cases, with the 
distinction between the two cases contrasted and con- 


90 Mogul Steamship Co. vs. McGregor, 23 Q. B. D. 598. Decided 
in the Queen’s Bench Division in 1889. On appeal to the House of 
Lords. 1892 A. C. 25. 

91 Standard Oil Co. vs. United States, 221 U. S. 1 (see pages 
55 and 56). 1911. 



86 DOES PRICE FIXING DESTROY LIBERTY? 

sidered within the one case. Lord Bowen says : 92 
‘ ‘ This seems to assume that, apart from fraud, intimi¬ 
dation, molestation, or obstruction * * *, there is 

“some natural standard of ‘fairness’ or ‘reasonable¬ 
ness’ (to be determined by the internal consciousness 
“of judges and juries) beyond which competition 
“ought not in law to go. There seems to be no author¬ 
ity, and I think, with submission, that there is no suf- 
“ficient reason for such a proposition. It would im- 
“pose a novel fetter upon trade. * * * until the 

“present argument at the Bar it may be doubted 
“whether shipowners or merchants were ever deemed 
“to be bound by law to conform to some imaginary 
“ ‘normal’ standard. * * * To attempt to limit 

“English competition in this way it would probably 
“be as hopeless an endeavor as the experiment of King 


82 Mogul Steamship Co. vs. McGregor, Id. (see page 615). The 
facts of this case are noteworthy. The Mogul Steamship Company 
were the owners of certain steamships employed in commerce be¬ 
tween England, China and Australia. McGregor, Gow & Company, 
the defendants, were shipowners who organized an association for 
the purpose of maintaining the rate of freights in the tea trade 
between China and Europe, and of securing that trade to themselves 
by allowing a rebate of five per cent, upon all freights paid by 
shippers who used only the vessels of the defendants. It was alleged 
that the defendants had conspired to prevent the Mogul Company 
from obtaining cargoes for its steamers by bribing, coercing and 
threatening shippers from using them, to the end that the company 
would be driven out of the carrying trade from China to England 
and thereafter freight rates could be maintained at a point which 
free competition would inevitably lower. In their defence, Mc¬ 
Gregor, et al., set up that the large profits derived from the tea 
freights alone enabled them to keep up a regular line of communi¬ 
cation between China and England all the year round, and that 
without a practical monopoly of the tea trade such uninterrupted 
communication must cease. It was held that the association, being 
formed by the defendants for the purpose of keeping the trade in 
their own hands, and not with the intention of ruining the trade 
of the plaintiffs, or through any personal malice or ill-will towards 
them, was not unlawful, and no action for conspiracy was main¬ 
tainable. This decision was subsequently affirmed on appeal to 
the House of Lords. (See Reports 1892 A. C., page 25.) 



THE UNCERTAINTY OF THE ACT 


87 


“Canute. But on ordinary principles of law, no such 
“fetter on freedom of trade can, in my opinion, be 
“warranted. A man is bound not to use his property 
“so as to infringe upon another’s right. Sic utere tuo 
U ut alienum non laedas. If engaged in actions which 
“may involve danger to others, he ought, speaking 
“generally, to take reasonable care to avoid endanger¬ 
ing them. But there is surely no doctrine of law 
“which compels him to use his property in a way that 
“judges and juries may consider reasonable: See 
“Chasemore vs. Richards. If there is no such fetter 
“upon the use of property known to the English Law, 
“why should there be any such a fetter upon trade V 9 
Lord Bowen, of course, distinguishes the Common 
Law rules as to monopolies and wrongful acts, and 
closes by saying : 93 “I myself should deem it to be a 
“misfortune if we were to attempt to prescribe to the 
“business world how honest and peaceable trade was 
“to be carried on in a case where no such illegal ele- 
“ments as I have mentioned exist, or were to adopt 
“some standard of judicial ‘reasonableness’ or of ‘nor- 
“ ‘mal’ prices or ‘fair freights,’ to which commercial 
“adventurers, otherwise innocent, were bound to con¬ 
form.” And Lord Justice Fry adds : 94 “To draw a 
“line between fair and unfair competition, between 
“what is reasonable and unreasonable, passes the power 
“of the Courts.” He then refers to the repeal of the 
same English Statutes treated by Chief Justice White 
in the Standard Oil opinion, because it had been found 
that such restraints substituted for freedom and com¬ 
petition “had a tendency,” as he says, “to discourage 
“the growth and to enhance the price of the same ( i . e 

88 See Mogul Steamship Co. vs. McGregor, 23 Q. B. D., page 

620. 

84 Mogul Steamship Co. vs. McGregor, id. (at page 625). 



88 DOES PRICE FIXING DESTROY LIBERTY? 

“of commodities). This statement is very noteworthy. 
“It contains a confession of failure in the past; the in¬ 
dication of a new policy for the future.” 95 

In the House of Lords, continual enforcement of 
this doctrine is reiterated. Lord Chancellor Hals- 
bury 96 quotes with approval Lord Bowen’s opinion in 
the Court below . 97 Lord Watson says : 98 “I cannot for 
“a moment suppose that it is the proper function of 
“English Courts of Law to fix the lowest prices at 
“which traders can sell or hire. * * * In the first 

“place, it was impossible that any honest man could 
“impartially discharge his duty of finding freights to 
“parties who occupied the hostile position of the appel¬ 
lants and respondents.” Lord Bramwell observes : 99 
“What is the definition of fair competition? What is 
“unfair that is neither forcible nor fraudulent? It 
‘ ‘ does seem strange that to enforce freedom of trade, of 
“action, the law should punish those who make a per¬ 
fectly honest agreement with a belief that it is fairly 
“required for their protection”; and ends by quoting 

95 See opinion of Lord Fry in Mogul Steamship Co. vs. Mc¬ 
Gregor, 23 Q. B. D. (at page 629). These English Statutes, known 
generally as the acts punishing “badgering, forestalling, regrating and 
engrossing,” were repealed as to their criminal provisions in the 
reign of George III (12 Geo. 3.C.71), because the restraints laid by 
the statutes upon dealing in corn, meal, flour, cattle and other victuals 
were found to increase the price of the same to the public. Further 
and more general removal of all such restraints were made by the 
statutes passed in the reign of Victoria (7 and 8 Vitc. C 24; 34 and 
35 Viet. C 31, and 39 and 40 Viet. C 22), and thereafter such mat¬ 
ters were left to the common law unaided. These statutes, as stated 
in the text, were discussed in some detail by Chief Justic White 
in his opinion in the Standard Oil case, because of their analogy 
and important bearing upon restraint of trade legislation in ths 
country. 

98 Mogul Steamship Co. vs. McGregor, on appeal to the House 
of Lords. Reported 1892 A. C., page 25. 

9T Id., 1892 A. C., page 37. 

** Id., 1892 A. C., page 43. 

98 Id., 1892 A. C., page 47. 



THE UNCERTAINTY OF THE ACT 


Lord Justice Fry: “To draw a line between fair and 
“unfair competition, between what is reasonable and 
‘ ‘ unreasonable, passes the power of the Courts. ’ ’ Lord 
MacNaghten concurred in the decision, and finally 
Lord Morris says: 100 “I cannot see why judges should 
“be considered specially gifted with prescience of what 
“may hamper or what may increase trade, or of what 
“is to be the test of adequate remuneration. In these 
“days of instant communication with almost all parts 
“of the world, competition is the life of trade, and I 
“am not aware of any stage of competition called ‘fair’ 
“intermediate between lawful and unlawful. The» 
“question of ‘fairness’ would be relegated to the 
“idiosyncrasies of individual judges.” And Lord 
Field concurred upon the grounds stated by Lord Jus¬ 
tices Bowen and Fry, Lord Hannen also concurring. 

For the Supreme Court, therefore, to abandon the 
position so clearly taken by it, that trade cannot be 
made free by tying up traders by a requirement that 
they should conduct their business under the threat of 
a criminal punishment if they did not successfully do 
what all these great Judges, both American and Eng¬ 
lish, have determined teas beyond their power, would 
be a violation of both the Fifth and Sixth Amendments 
of the Constitution of the United States, and would, by 
destroying the one sure remedy for high prices—that 
is free competition—effectively tend to make them per¬ 
manent. 


100 Id., 1892 A. C., page 50. 






CHAPTER Y. 


Pbices Cannot Be Made Fair by Governmental Regu¬ 
lation. 


The present inquiry necessarily leads to an ascer¬ 
tainment of whether experience has not already demon¬ 
strated not merely the dangers, but the fallacy of be¬ 
lieving that the only effective way of fixing a fair price 
for commodities is by an usurpation of the fundamental 
right and liberty of the whole community, through bar¬ 
ter, to fix such reasonable prices,—to determine what 
are proper prices through the “higglings of the mar¬ 
ket” ; whether, the traditions of our race have not been 
wisely followed in excluding an arbitrary monopolistic 
price, as against the people’s price, whether determined 
by a small or even as great a combination as the Gov¬ 
ernment itself. 

Men enter that form of “the pursuit of happiness” 
called “business” for the purpose of profit. Their 
exertions are stimulated in proportion to their hopes. 
This lies at the foundation of the law of supply and 
demand. The initial fallacy, which the law has so far 
exposed, is in assuming that high prices are necessarily 
excessive prices', for high prices are under a state of 
freedom and in the absence of restraints, whether by 
Government or any one else, the sole permanent 
cure for scarcity. Competition is as automatic as the 
thermometer. Where free, by fluctuation in price re¬ 
sulting from it, it brings about both the necessary reduc¬ 
tion in consumption, and in turn supplies the vital stim¬ 
ulant to production. Why is it that, notwithstanding 
(91) 


92 DOES PRICE FIXING DESTROY LIBERTY? 

the law of decreasing returns, sugar that in early days 
could not be bought for $1.00 a pound, has, in ordinary 
times, become-one of the cheapest of commodities'? The 
answer is obvious. The high price stimulated invest¬ 
ment of capital, and the application of invention, genius 
and intense energy, which, in turn, stimulated produc¬ 
tion and the consequent competition that resulted in the 
decline always following. Exactly this same law is 
operating now, and it will result in a like inevitable 
decline. See how fully this economic law is exempli¬ 
fied in the present market of the leather and silk indus¬ 
tries. Though, if the results of the investigation of 
all great economists be not incorrect, this decline is 
being retarded now only by the dangers and annoy¬ 
ances created by governmental power. Of course, it 
does not tend either to courage or clarity of judgment 
for a business man who may be making a thousand sales 
a day to fear that he may unwittingly be committing an 
equal number of criminal offenses, that may subject 
him to heavy penalties of fine and imprisonment, if 
some District Attorney and jury, desirous of getting 
bargains, might decide that he should have charged less 
for the commodities that he has sold. Indeed, if such 
be the law, and it be enforced—it cannot be impartially 
enforced, for all the judges, juries and district attor¬ 
neys could not possibly pass upon the multitudinous 
cases that must arise and need investigation. Under 
such circumstances trade must stop, or become a mere 
criminal lottery. 

As John Stuart Mill says: 101 “Insecurity para¬ 
lyzes, only when it is such in nature and in degree, 
“that no energy, of which mankind in general are 
“capable, affords any tolerable means of self-protec* 
“tion. And this is a main reason why oppression by 


101 See Mills’ Political Economy, Vol. 2, page 384. 



PRICES CANNOT BE MADE FAIR BY GOV. REGULATION 93 

“the government, whose power is generally irresistible, 
“by any efforts that can be made by individuals, has 
“so much more baneful an effect on the springs of 
“national prosperity, than almost any degree of law¬ 
lessness and turbulence under free institutions. 
“* * * but no countries in which the people were 

“exposed without limit to arbitrary exactions from the 
“officers of government, ever yet continued to 
“have industry or wealth.” Continuing, Mr. Mill 
says: 102 “All that governments can do in these emer¬ 
gencies, is to counsel a general moderation in con¬ 
sumption, and to interdict such kinds of it as are not 
“of primary importance. * * * A limitation of 

“competition, however partial, may have mischievous 
“effects quite disproportioned to the apparent cause. 
“* * * When relieved from the immediate stim¬ 

ulus of competition, producers and dealers grow 
‘ ‘ indifferent to the dictates of their ultimate pecuniary 
“interest; preferring to the most hopeful prospects, the 
“present ease of adhering to routine.” 

And Mr. Mill forcibly points out how deleterious it 
is always to deprive people of the education, the crea¬ 
tion of energy, independence and self-control, that re¬ 
sult from their freely conducting their own business af¬ 
fairs: “There cannot be,” he says, 103 “a combination of 
“circumstances more dangerous to human welfare, than 
“that in which intelligence and talent are maintained at 
“a high standard within a governing corporation, but 
“starved and discouraged outside the pale. Such a 
“ system, more completely than any other, embodies the 
“idea of despotism .” 

Out of a multitude of like considerations, two, at 


102 Mills, Political Economy, Bk. Ill, Chap. Ill, Sec. I (Vol. 
II, page 433)- 

103 Mills, Political Economy, Vol. II, page 450. 



94 


DOES PRICE FIXING DESTROY LIBERTY? 


least, should not be passed without attention. The 
trade principles under discussion certainly have recog¬ 
nition in the constitutional provisions as to patents, 
that go to the extent of even creating monopolies. Such 
monopolists have not only a common right of determin¬ 
ing their prices for their products, but they have a 
right of action against any one who dares compete with 
them. This has, however, always properly been held 
necessary and just, because the public forever after has 
the benefit resulting from the energy and improve¬ 
ment thus incited. But in their totality such inven¬ 
tions are trivial in comparison with those created by 
the stimulus of competition and increased production, 
which are never patented or extensively known. Such 
are the inventions, improvements and devices which are 
developed from day to day in the course of industry 
and business, and are directly attributable to the vitaliz¬ 
ing forces which unfettered competition and freedom in 
trade nurse into being. Such single accretions may, 
in themselves, be relatively insignificant, but in their 
totality they are enormous. To say, therefore, that 
these benefactors to industry and trade are not to have 
the benefit and reward for the short period that com¬ 
petition does not take it away from them, but are even 
to be treated as criminals for taking the reward thus 
justly earned, is to violate the whole spirit of the Con¬ 
stitution. 

Again, like considerations apply to what is called 
“ turnover. ” The investigations made by Harvard 
University show that the variation in this respect be¬ 
tween competitors is enormous. Of course, the obtain¬ 
ing of an adequate supply, which the Act looks to, is 
enormously aided by stimulating the profits resulting 
from multiplied output. If by industry, improvement 
and invention, a plant producing 1,000 barrels a day 


PRICES CANNOT BE MADE FAIR BY GOV. REGULATION 95 

of a commodity can be increased, without increase of 
cost to the consumer, to 10,000 barrels a day, it is of 
enormous advantage to the public whether there be an 
immediate decrease in price or not. The stimulus, 
therefore, that should be given, for such increase of pro¬ 
duction must not only reduce scarcity, but must increase 
competition, and ultimately reduce prices. To say, 
therefore, that the seeking of this legitimate and highly 
beneficial reward, even for the short time it can be 
enjoyed, is to imperil a man in all the dangers of 
criminal prosecution, is to say that which is economi¬ 
cally unsound. An exceedingly interesting discussion 
of this matter by Mr. Carl Snyder is to be found in 
the March-April 1920 Number of McClure’s Maga¬ 
zine.’ 03 * He says, in part: “There has been one Bureau 
“at Washington whose aggregate expenses now run 
“beyond a million dollars, that has seemed to make its 
‘‘ especial business distilling into the public mind every 
“kind of vicious idea about business. * * * It has 

“sent out report after report showing the enormous 
“profits of this or that company or trade. But what 
“kind of profit? Always the profits on the invested 
“capital! Rarely, if ever, have these profits been fig¬ 
ured on gross sales. Why? Because, however large 
“the profits cited have been, on the invested capital, 
“the average profits on sales have been something on 
“the order that I have given above, usually less than 
“five or six per cent., often half this, and in the case 
“of the criminal band of meat packers, known as the 
“ ‘Big Five,’ they have often been below two per cent. 
“And this brings us to the very heart of the question 
“of ‘profiteering.’ I make bold to say that the public 
“has relatively little interest in the earnings upon cap- 

103a “McClure’s Magazine,” March-April, 1920, page 23, article 
entitled “Who is Profiteering?” 



96 


DOES PRICE FIXING DESTROY LIBERTY? 


“ital, and, in any event, a great deal less than in the 
“question of the business ability of his butcher and 
“baker and corner groceryman. It will often happen 
“that one dealer will make two or three times as much 
“on his invested capital as his neighbors and com¬ 
petitors, and yet sell his goods to the public at a lower 
“price, or, what is the same thing, sell better goods for 
“the same money. He will do this because he under¬ 
sells his competitors. The matter is simply this: 
‘ ‘ Some merchants will turn their capital over, ten, fif- 
“teen, twenty, and even twenty-five times a year (in 
“the case of some retail grocers). Others only four or 
“five times. That is their year’s sales will total five, 
“ten or more times the sum they have invested. The 
“Harvard Bureau, which I have quoted, found that 
“the average turnover in the retail grocery trade was 
“about eight times a year. But the actual range was 
“from twenty-seven times down to less than two times. 
“Now, here was a very remarkable fact. In the Har- 
“vard Bureau Reports, the grocery store with the low- 
“est cost of doing business had a turnover of nearly 
“nineteen times a year. And, in general, the higher 
“the turnover, the lower the day’s expenses, and, there¬ 
of ore, lower prices to the public. * * * Natural 

“monopolies and powerful combinations may perhaps 
“very justly be brought under governmental control 
“or restraint, though experience has shown that rarely, 
“if ever, have such attempts been other than disastrous, 
“and meant a yet higher cost to the public in the long 
“run. But, in the case of ordinary commodities, the 
“action is automatic and cannot fail. * * * Tha 

“price of things—alike of goods, service, and every¬ 
thing that money can buy—is indeed the most ex- 
“quisite bit of psychology in the world. At a certain 
“price, a certain number of people will buy a given 


PRICES CANNOT BE MADE FAIR BY GOV. REGULATION 97 


“article. Raise the price of this article without rais- 
“ing the purchasing power and the demand will fall off. 
“This was true from the beginning of human barter 
“and trade, and this will be true down to the last set 
“of human beings who burn the last bit of fuel avail¬ 
able upon a cold and exhausted earth. It can never 
“be otherwise; and if it were not so, to all intents, 
“human trade and barter would be impossible. This 
“is the pivotal fact upon which the commerce and 
“industry of the whole wide world, mounting now into 
“hundreds of billions of dollars in volume, rests.” 

Manifestly, prices fixed by the whole world in its 
untrammeled and free markets have thrown about 
them, certainly so far as the trade and commerce of 
this country are involved, the protection of the Consti¬ 
tution of the United States, and for the Act to declare 
them when thus fixed unreasonable and excessive would 
be confiscatory. The Courts having, prior to the time 
of the Constitution, defined what is just and reasonable 
compensation, or, as the Constitution defines it, “fair 
compensation now by statute to deny this meaning, 
so long established, must be in plain defiance of the 
Constitution, as well as all historical and economic 
precedents. 

Returning from this digression to the subject un¬ 
der inquiry. The etymology of the word “ competi¬ 
tion’’ is perfectly obvious. People compete when they 
seek an object together. In its legal sense and signifi¬ 
cance, it is an act directed to the purpose of acquiring 
a common thing or end individually and as against 
others. It will later be shown that, so far as price 
fixing of commodities is concerned, this common seek¬ 
ing, because of the enormous difficulties of the subject, 
is the only practical and effective method. Indeed, not 
merely that the law permits it, but requires it as essen- 


98 


DOES PRICE FIXING DESTROY LIBERTY? 


tial to the preservation of constitutional liberty. The 
Supreme Court, in its recent opinion in the case of 
United States vs. Union Pacific R. R. Co., 104 unani¬ 
mously and succinctly says: “To compete is to strive 
“for something which another is actively seeking and 
“wishes to gain. * * * To preserve from undue 

“restraint the free action of competition * * * was 

“the purpose which controlled Congress in enacting 
“this statute, 105 and the Courts should construe the law 
“with a view to effecting the object of its enactment. 
“Competition * * * consists not only in making 

“rates * * *, but includes the character of the 

“service rendered. * * * The consolidation * * * 

‘ ‘ creates a combination which restrains interstate com- 
“merce within the meaning of the statute, because, in 
“destroying or greatly abridging the free operation of 
“competition theretofore existing, it tends to higher 
“rates.” 

Again the same tribunal says, in the case of the 
United States vs. Reading Company: 106 “The evil is 
“the combination. Without it the several groups * * * 
“have the power and motive to compete. That each 
“may for itself advance the price * * * or cut down 
“the production, is true. But in the power which each 
“other group would have to compete would he found a 
“corrective.” 

A very valuable statement of this truism is to be 
found in the unanimous opinion of one of the ablest 
Courts 107 in the United States, Mr. Justice Van De- 

104 United States vs. Union Pacific R. R. Co., 226 U. S. 61 (see 
page 87). 1912. 

105 The Sherman Anti-Trust Law, Act of Congress of July 2nd, 
1890. 

100 United States vs. Reading Company, 226 U. S. 324 (at page 
353). 1912. 

107 United States Circuit Court of Appeals for the Eighth 
Circuit. 



PRICES CANNOT BE MADE FAIR BY GOV. REGULATION 99 


vanter, now of the Supreme Court, participating as a 
Circuit Court Judge. In this case, Whitwell vs. To¬ 
bacco Co., 108 the fundamental principle is thus, again, 
announced: “The right of each competitor to fix the 
“prices of the commodities which he offers for sale 
“ * * * is indispensable to the very existence of 

“ competition . Strike down or stipulate away that 
“ right, and competition is not only restricted} but 
“ destroyed. * * * Contracts of competitors in the 

“production or sale of merchantable commodities to 
“ deprive each competitor of the right to fix the prices 
“of his own goods, the terms of the sale, or the cus¬ 
tomers to whom he shall dispose of them, and either 
“to fix these prices, terms, and customers by the agree- 
“ment of the competitors, or to intrust the power to 
“dictate them, * * * necessarily have the effect 

“either to stifle competition entirely, or to directly and 
“substantially restrict it, because such contracts de- 
“prive the rivals in trade of their best means of insti¬ 
tuting and maintaining competition between them- 
‘ ‘ selves. * * * Each had the right to fix the prices 

“at which it would dispose of them, and the terms upon 
“which it would contract to sell. * * * There is 

“nothing in the Act of July 2nd, 1890, (Sherman Anti¬ 
trust Act), which deprived any of these competitors 
“of these rights. If there had been, the law itself 
“ would have destroyed competition more effectually 
“ than any contracts or combinations of persons or 
“ corporations could possibly have stifled it. The ex¬ 
ercise of these undoubted rights is essential to the 
“very existence of free competition, and so long as 
“their exercise by any person or corporation in no way 
“deprives competitors of the same rights, or restricts 

108 Whitwell vs. Continental Tobacco Co., 125 Fed. Rep. 454 (at 
page 459 )- 1903. 



100 


DOES PRICE FIXING DESTROY LIBERTY? 


“them in the use of these rights, it is difficult to per¬ 
ceive how their exercise can constitute any restriction 
“upon competition or any restraint upon interstate 
“trade. The acts of the defendant * * * are 

“nothing more than the lawful exercise of these un¬ 
questioned rights which are indispensable to the ex- 
u istence of competition or to the conduct of trade. 
“* * * An attempt by each competitor to monopo¬ 

lize a part of interstate commerce is the very root of 
“all competition therein. Eradicate it, and competi¬ 
tion necessarily ceases—dies. Every person engaged 
“in interstate commerce necessarily attempts to draw 
“to himself, and to exclude others from, a part of that 
“trade; and, if he may not do this, he may not com- 
“pete with his rivals, all other persons and corpora¬ 
tions must cease to secure for themselves any part of 
“the commerce among the States, and some single cor¬ 
poration or person must be permitted to receive and 
“control it all in one huge monopoly. The purpose of 
“the Act of July 2nd, 1890, was, however, to prevent 
“the stifling of competition, not to destroy it or to fos- 
“ter monopoly, and any construction of any of its pro¬ 
visions which would give it such an effect is unreason¬ 
able and inconsistent with the object and spirit of the 
“law. It is an interpretation which fosters the mis- 
“chief it was passed to remedy.’’ 

The foregoing sound reasoning by the Court as 
shown in this statement of legal and economic princi¬ 
ples, may be applied with peculiar force to the Lever 
Act, affording a true guidance, not only in seeking its 
intendment, but also in prescribing a liberal interpre¬ 
tation of its terms necessarily involved in the act of en¬ 
forcing it. 

An important case upon the question of the right 
of the owner to fix the price of his commodities in his 


PRICES CANNOT BE MADE FAIR BY GOV. REGULATION 101 

own free discretion in the course of free competition 
is that of United States vs. Colgate, 109 for not only is 
there cited therein an ample collection of authorities, 
including decisions of the Supreme Court, but the case 
itself was affirmed on appeal to the Supreme Court. 110 
Judge Waddill, in the lower Court, says : 1U “ * * * how 
“far one may control and dispose of his own property; 
“that is to say, whether there is any limitation thereon 
“if he proceeds in respect thereto in a lawful and bona 
“fide manner. That he may not do so fraudulently, 
“collusively, and in unlawful combination with others, 
“may be conceded. * * * But it by no means fol¬ 

lows that, being a manufacturer of a given article, 
“he may not, without incurring any criminal liability, 
“refuse absolutely to sell the same at any price, or to 
“ sell at a named sum to a customer. * * * Author- 

cities to sustain this view might be cited almost with- 
“ out number .” After citing many cases, he con¬ 
tinues : 112 “The indictment should set forth such a state 
“of facts as to make it clear that a manufacturer, en- 
* * gaged in what was believed to be the lawful conduct of 
“his business, has violated some known law, before it 
“is haled into Court to answer the charge of the com- 
“mission of a crime. In the instant case, the Court’s 
“conclusion is that the averments of the indictment, 
“* * * read in the light of the defendant’s inalien- 
“able right to deal lawfully with his own property, the 
“ handling, trading in, and disposing of which is made 
11 the subject of this indictment, fail to charge any of - 
cfense, either in restraint of trade and commerce, un- 
“der the Sherman Act, or any other law of the United 
il States” 

10# United States vs. Colgate, 253 Fed. Rep. 522. 1918. 

110 United States vs. Colgate, 250 U. S. 300. 1919. 

111 Id., 253 Fed. Rep. (see page 525). 




102 DOES PRICE FIXING DESTROY LIBERTY? 

The Supreme Court quotes largely from this opin¬ 
ion. It says: 113 “The retailer, after buying, could, if 
“he chose, give away his purchase, or sell it at any price 
“he saw fit; * * * his course in these respects be- 

“ing affected only by the fact that he might by his ac- 
“tion incur the displeasure of the manufacturer, ” etc. 
Indeed, this language is quoted twice in the opinion 
by the Supreme Court, which then says: 114 “The pur- 
“pose of the Sherman Act is to prohibit monopolies, 
“contracts and combinations which probably would 
“unduly interfere with the free exercise of their rights 
“ly those engaged, or who wish to engage, in trade and 
“ commerce—in a word, to preserve the right of free- 
“dom to trade. In the absence of any purpose to cre- 
“ate or maintain a monopoly, the Act does not restrict 
“the long recognized right of a trader or manufacturer 
“ engaged in an entirely private business, freely to ex¬ 
ercise his own independent discretion as to parties 
“with whom he will deal. And, of course, he may an- 
“nounce in advance the circumstances under which he 
“will refuse to sell ” The Colgate case was one where 
a dealer not only fixed the prices of the articles which he 
manufactured and sold, but went still further and re¬ 
fused to deal with others who would not maintain the 
prices which he had established for his goods. In the re¬ 
cent opinion of Mr. Justice McReynolds in United 
States vs. Schrader’s Sons, 11B a case where an effort was 
made to fix and hold a uniform price for an article, he 
says: ‘ ‘ The evil is, indeed, as it always has been to take 
“away dealers’ control of their own affairs, and thereby 
“destroy competition, and restrain the free and natural 
“flow of trade.” 

118 Id.. 250 U. S. (at page 306). 

114 United States vs. Colgate, 250 U. S. (at page 307). 

115 United States vs. Schraders’ Sons, Inc., 252 U. S. 85 (see 
page 100). Decided March 1st, 1920. 



PRICES CANNOT BE MADE FAIR BY GOV. REGULATION 103 

I hesitate to quote Professor Fisher’s “Stabilizing 
the Dollar,” published this year, because of the diffi¬ 
culty of resisting a re-printing of the whole work, but 
one passage I must include in this review. He says: 116 
“It will do no good, of course, to rail at the lucky win- 
“ners in the lottery. The public was greatly mistaken 
“in attributing low prices to the ‘strangle-hold’ of 
“wicked bondholders, and is equally mistaken today 
“in attributing high prices to the personal turpitude of 
“profiteers. * * * How can we blame a business 

“man (especially one who, as an officer of a corpora¬ 
tion, acts in the interests of others whose capital he 
“is managing) for getting the best prices he can? We 
“cannot expect him to sell below the market. In fact, 
“if market conditions cause profits to fall into his lap, 
“he would be recreant in duty to throw them away.” 

However true this may be, it is unfortunate that 
Professor Fisher, although it was not relevant to the 
purpose of his book, did not use his illuminating mind 
to show how great such failure of duty would really 
be; for, where a business is a continuing one, such 
profits are always more than apt to be entirely illusory, 
and ultimately absolutely necessary to balance inevit¬ 
able loss! 

Let us refer again for a passing moment to the 
hypothetical case of the sugar refiner, which was dis¬ 
cussed in Chapter I. Raw sugar advanced in price 
within the past year from five to ten cents per pound, 
and thence to twenty cents per pound, and even still 
further. If the refiner sold his sugars at a reasonable 
profit on the first price of five cents, the inevitable con¬ 
sequence would be that he could “replace” only half 
of his necessary supplies. And then suppose, this sup- 


118 Fisher’s “Stablizing the Dollar” (at page 59). 



104 DOES PRICE FIXING DESTROY LIBERTY? 

ply, though only one half his requirement, again ad¬ 
vanced to twenty cents per pound for raw sugars, and 
he took but a living profit. He would have come within 
the Government’s contention as to his duty under the 
terms of the Lever Act, even though each “turnover” 
in such a course of business, would bring him that de¬ 
gree closer to financial ruin. On the other hand, let 
us assume that this refiner, when sugar advanced from 
five to ten cents, based his profit upon that replace¬ 
ment price, and did likewise when the twenty-cent price 
was reached. Undoubtedly it would be regarded as 
an atrocious case of profiteering, though for him not to 
do so would bring his refinery to disaster. And due 
regard must be given by the refiner to the immeasurable 
anxieties of taxation and risk of enormous declines in 
the value of his stock on hand which must follow from 
the stimulus to increase supply arising from such high 
prices. So that whilst, on the one hand, there may be 
complaint of prices on the part of consumers, it is safe 
to say that there is no sugar refinery whose manage¬ 
ment is not beset with the gravest apprehension under 
the present conditions, and under the meaning sought 
to be given to the Lever Act. 

As was to be expected, this reversion to what were 
believed obsolete ideas has actually revived the ideas 
of the mercantile system, which Adam Smith was sup¬ 
posed to have forever laid to rest, with all its injurious 
absurdities. 

Jacob H. Hollander, the able professor of Po¬ 
litical Economy at Johns Hopkins University, has 
also called attention to the fact that the Govern¬ 
ment itself is largely responsible for that supposed 
form of profiteering, of necessity, appearing in the 
accounts of every business which held a large stock 
of goods. Indeed, the supposed offense is really 


PRICES CANNOT BE MADE FAIR BY GOV. REGULATION 105 

thrust upon them. He says: 117 “It is a symp- 
“tom of the disease, not the disease itself. Profiteer¬ 
ing is the effect, not the cause of’the high cost of liv- 
‘ ‘ ing. Those who have been trying to make the Ameri¬ 
can people believe that profiteering causes high prices 
“are in a class with the quacks who will tell a consump¬ 
tive that his loss of weight is due to his high color, 
“instead of saying that both are the symptoms of the 
“tissue destroying bacillus. The answer is that infla¬ 
tion is due to financial mistakes of the Administra¬ 
tion at Washington, (1) while we were getting ready 
“for war, (2) while we were at war, and (3) after the 
“war was over. During each of these periods, the 
“Treasury permitted, and indeed, encouraged an in¬ 
crease in the country’s money supply, and the certain 
“prospect of rising prices .” 

Surely it would be justifiable reiteration to weigh 
again the thoughts of Professor Laughlin in his “Money 
and Prices,” to which reference has several times been 
made. He says: 118 “As a fall of prices inures to the 
“benefit of creditors, a rise of prices would inure to 
“the benefit of debtors. If it would be wrong to have 
“‘legislation favoring the creditor class, so it would be 
“wrong to have legislation favoring the debtor class. 
“* * * TliinU of a civil polity, which in the in- 

“terest of one set of persons should undertake to 
“regulate the prices of goods in the country's markets. 
“* * * If we are to enter upon that path, it is well 

“to know whither it leads. One such step in Socialism 
“leads to another, and the outcome is the subversion 
“of existing society. * * * Shall we accept dis- 

“ honor, or shall we disappear down the unknown path 

117 Jacob H. Hollander’s Article in New York Times of Sunday, 
May 2nd, 1920, entitled “How Inflation Touches Every Man’s 
Pocketbook.” 

11# Laughlin’s “Money and Prices” (at pages 187, 188 and 189). 



106 DOES PRICE FIXING DESTROY LIBERTY? 

“of Socialism? One or the other must we choose, if 
“the public is pleased to occupy itself in the future 
“with the price question. * * * And so soon as 

“the forces operating on price are understood to be 
“complex, and of a nature not to be interfered with 
“by legislation, we shall be free from a dangerous 
“ agitation. ” 

The conclusions reached in the foregoing author- 
ties show convincingly that upon this subject matter 
our contemporary thought, both from the angle of 
the law and political economy, is in harmony with the 
development of English opinion as expressed in the 
decision of Lord Justice Bowen in the Mogul Steam¬ 
ship Company case, referred to at length in the fore¬ 
going pages. The comprehensive analysis and help¬ 
ful discussion of the very considerations paramount in 
this inquiry make relevant one further allusion to this 
classical opinion. “What then,’’ Lord Bowen says, 119 
“are the limitations which the law imposes on a trader 
“in the conduct of his business? * * * His right to 
“trade freely is a right which the law recognizes and en¬ 
tourages. * * * No man, whether trader or not, can, 
“however, justify damaging another in his commercial 
“business by fraud or misrepresentation. Intimidation, 
‘ ‘ obstruction, and molestation are forbidden; so is the 
“intentional procurement of a violation of individual 
“rights, contractual or other. * * * But the de¬ 

fendants have been guilty of none of these acts. They 
“have done nothing more against the plaintiffs than 
“pursue to the bitter end a war of competition waged 
“in the interest of their own trade. * * * I can 

“find no authority for the doctrine that such a com¬ 
mercial motive deprives of ‘just cause or excuse.’ 

119 Mogul Steamship Co. vs. McGregor, 23 Q. B. D. 611; 1892 
Appeal Cases 25. (See 23 Q. B. D., at page 614.) 



PRICES CANNOT BE MADE FAIR BY GOV. REGULATION 107 

“* * * All commercial men with capital are ac¬ 

quainted with the ordinary expedient of sowing one 
“year a crop of apparently unfruitful prices; * * * 

“and until the present argument at the Bar, it may be 
“doubted whether * * * merchants were ever 

“deemed to be bound by law to conform to some imagin¬ 
ary ‘normal’ standard of freights or prices, or that 
“Law Courts had a right to say to them in respect of 
“their competitive tariffs, ‘Thus far shalt thou go and 
“no further. * * * I myself should deem it to be 
“a misfortune if we were to attempt to prescribe to 
“the business world how honest and peaceable trade 
“was to be carried on in a case where no such illegal 
“elements as I have mentioned exist, or were to adopt 
“some standard of judicial ‘reasonableness/ or of 
“ ‘normal’ prices, or ‘fair freights/ to which commer¬ 
cial adventurers, otherwise innocent, were bound to 
“conform.” 

Mr. Justice McKenna, in the often followed opin¬ 
ion delivered in the National Cotton Oil case, well 
says: 120 “Its (monopoly’s) dominant thought now is, 
“to quote another, ‘the notion of exclusiveness or 
“ ‘unity’; in other words, the suppression of competi¬ 
tion by the unification of interest or management, or, 
“it may be, through agreement and concert of action. 
“And the purpose is so definitely the control of prices 
“that monopoly has been defined to be ‘unified tactics 
“ ‘with regard to prices.’ It is the power to control 
“prices which makes the inducement of combinations 
“and their profit. It is such power that makes it the 
“concern of the law to prohibit or limit them. And 
“this concern and the policy based upon it * * * 

“has expression * * * in a well-known national 

180 National Cotton Oil vs. Texas, 197 U. S. 115 (see page 129). 
1905. 



108 


DOES PRICE FIXING DESTROY LIBERTY? 


“enactment. * * * competition, not combination, 

“should be the law of trade .'* 1 

And so is established the proposition that the Statu¬ 
tory and Common Law, in relation to public policy, is 
that the public welfare is best served by giving the 
power and liberty of price fixing as to commodities to 
the whole body of our people, worked out through com¬ 
petition, and protected from control by any lesser.group 
or groups, or even the Government itself. This has all 
resulted from the demonstration by experience, as is 
stated in the Northern Securities case: 121 “That the 
“natural effect of competition is to increase commerce, 
“and an agreement whose direct effect is to prevent 
“this play of competition restrains instead of promotes 
“trade and commerce. 11 To such an extent, indeed, 
did it prevent trade, that it became necessary to consti¬ 
tute it a criminal offense to do those things that by their 
necessary operation tend “to deprive the public of the 
advantages that flow from free competition 

Mr. Justice Holmes, in the same case, points out 
that: “At times Judges need for their work the train¬ 
ing of economists and statesmen, and must act in view 
“of their foresight of consequences. 11 

Indeed, no tribunal has been more conscious of 
this necessary point of view than the Supreme Court 
itself, as is shown by its decisions hereinbefore referred 
to, and particularly in the Knoxville Water Company 
case, 122 where the Court by a unanimous opinion points 
out the impropriety of guesses as a basis of judicial 
action, and gives warning that values would become 
unsettled and confidence destroyed by denying to pri¬ 
vate property its just reward. 

m Northern Securities Company vs. United States, 193 U. S. 
197 (see page 331). 1904. 

1,2 City of Knoxville vs. Knoxville Water Co., 212 U. S. 13. 
(Discussed in Chapter I.) 1909. 



PRICES CANNOT BE MADE FAIR BY GOV. REGULATION 109 


Of course, the Knoxville Water Company case in¬ 
volved an enterprise necessarily non-competitive and 
monopolistic by nature,—a class of cases both limited 
and, from their very character, requiring State control; 
but it has now been demonstrated by actual results that 
even in this simple and limited class of cases, there 
could not be a solution without the aid of everybody, 
and that aid, having failed the Court, the disaster pre¬ 
dicted by it has now to be faced. Taxation to make up 
the consequent deficits must run into large sums of 
money; the dislocation of business from inadequate 
transportation facilities to even greater sum; and the 
final results of checked enterprise and impaired de¬ 
velopment must inevitably follow. One almost won¬ 
ders whether even in the necessary monopolies, it would 
not have been better to have left them to that free com¬ 
petition through which Liberty works to best results. 
But can any one reasonably conclude that even eco¬ 
nomically it is well or even possible, in relation to com¬ 
modities where a still more flexible adjustment is im¬ 
perative, to throw the ultimate determination of the 
millions of daily transactions upon the Supreme Court 
of the United States? Apart from the fact that no 
Court, even of supermen, could ever transact all the 
business of the United States, it is equally clear that 
that business could not be carried on if, with the hourly 
fluctuations that must take place in the value of com¬ 
modities, every dealer in them must wait for the time 
necessary to ascertain whether he was legitimately en¬ 
gaging in business or had committed criminal offenses 
beyond number. 

Professor Laughlin upon this subject calls atten¬ 
tion to one of the peculiar results of rate fixing in rela¬ 
tion to monopolies, saying: 123 “It is a strange develop- 

128 Laughlin’s “Money and Prices,” page 161. 



110 DOES PRICE FIXING DESTROY LIBERTY? 

“ment—indeed, a curious travesty on justice—that tho 
“railway, which, by reason of its low cost of transpor¬ 
tation, has practically destroyed the farming interests 
“of the East, should be regarded by the farmer of the 
“West as the vampire sucking out the blood of his 
“agricultural profits; and yet the Western lands could 
“have been opened to seaboard markets only by means 
“of it and its low rates. The Eastern farmer must 
“justly regard the railway, and the resultant competi¬ 
tion of the richer farm land in the West, as the cause 
“of his ruin and the force which has driven him to new 
“employments; yet the Western farmer would not now 
“be in existence if it were not for the railway. The 
“proof that it has served the Western farmer well is 
“to be found in the sad ruins of Eastern agriculture.” 
And Professor Laughlin might have added to this that 
even now in his new occupation, the Eastern farmer, as 
well as the rest of the community, has to be enormously 
taxed to pay for the inadequacy of the returns to those 
who have thus aided in his ruin. 

To the writer it seems that only second to the dan¬ 
gers of destroying Liberty is the danger of overburden¬ 
ing the Supreme Court of the United States. It was 
America’s greatest invention in government—that it 
should be respected, even revered, is in the same degree 
of importance in the safeguarding of Liberty as that 
free competition should not he disturbed as the only 
safe method of fixing commodity prices. It is futile, 
therefore, to attempt to place upon it duties impossible 
of performance. Nor as shown by the cases might the 
Court take kindly to having thrust upon it the task of 
becoming the final arbiter in the “pricing” of com¬ 
modities. The thinker may understand that the fault 
was legislative, not judicial, but the mass of men will 
always feel that there is nothing so unsuccessful or 


PRICES CANNOT BE MADE FAIR BY GOV. REGULATION 111 

discouraging as failure, and will attribute that failure 
to the final actors. Much could be added to show the 
impossibility of replacing any body, any government 
or governmental agency as a successful substitute for 
all the peoples of the world, acting jointly and by means 
of free competition, as the price fixers of non-monopo- 
listic commodities. 

















CHAPTER VI. 


The Act in Relation to the Uncertainties in Trade. 


The great question that presents itself under this 
heading is—“how much must be guessed” in business? 
How many elements must be risked? The difficulty, 
under present conditions, consists not in finding in¬ 
stances in trade where the purest speculation and sur¬ 
mise are essential, but in deciding how many of these 
may be treated without overburdening the subject. 

Economic decisions are self appealing, being 
founded on natural law. Human law cannot vary the 
inevitable results that follow human errors. In the end 
we are inevitably controlled by the uncontrollable, and 
part of that law is that nothing more decreases produc¬ 
tion, with its consequent increase of prices, than uncer¬ 
tainty. And we have uncertainty to the nth power 
when ordinary commodities, that are capable of unlim¬ 
ited production, are being dealt with in free and un¬ 
trammeled competition. If this be but clearly kept in 
mind and made the touchstone, no other classification 
seems imperative. There are those who think it but a 
matter of nomenclature. That if the legislative power 
or some other proper authority but decree that certain 
things be called public utilities, thereby it changes the 
whole natural law, and that anything can be regulated 
in the same way. But that is placing the cart before 
the horse and asserting that the mere name brings about 
the constant distinction between these two classes, and 
not the economic differences. If, however, there ever 
has been a time when there was no excuse for falling 
into such error, it is the present. 

In the case of commodities, the distressing prepon¬ 
derance of failure is easily accounted for. The lowest 
(113) 


114 DOES PRICE FIXING DESTROY LIBERTY? 

price for which men can safely sell goods, with the hope 
of remaining solvent, is the price fixed by the correct 
guess at what they can continually replace them, plus 
two additional sums. First, when goods are high, the 
amount below the normal, to which they are bound to 
fall; and, second, the amount that will carry them over 
the depressed period that is sure to follow all periods 
of inflation. What always happens when scarcity ap¬ 
pears is that “the trade,” indeed the whole world, in¬ 
sists upon the duty of increased production. As a re¬ 
sult, wages and everything necessary in production ad¬ 
vance. Costs sink to a second place. People having 
been frightened inevitably hoard, and finally when the 
joint effort of the world oversteps the market, there 
come the collapses called “panics,” and thousands of 
business men are swept to ruin. Thus scarcity is the 
true mother of panic. It has always been the inherent 
nature of such transactions. It may be called “over¬ 
production,” or “inflation,” or by any other name, but 
there must be insurance against it, or widespread dis¬ 
aster will follow. Most commonly the estimate of such 
insurance tends to be fixed too low in the fierce conflicts 
of free competition, not too high, and the estimated 
price is in reality a large part insurance against that 
which is inevitable and uncertain only as to time of its 
actual occurrence. 

On the other hand, in the properly so-called public 
utility cases, where competition is eliminated, where the 
chief element is plant, and commodities but enter to a 
limited extent, and, where, as Mr. Justice Peckham 
points out, 124 “ risk is reduced, almost reduced to a mini¬ 
mum,” public regulation, however unsatisfactory, is 
at least possible. This is true even though commod- 

124 Wilcox vs. Consolidated Gas Co., 212 U. S. 19 (see page 49), 

1909. 



ACT IN RELATION TO THE UNCERTAINTIES IN TRADE 115 

ities used by public utilities do become a minor 
factor in the calculation. When on the other hand 
War or other cause makes the commodities used 
a superior factor, the system must break down, 
because of this overmastering difficulty. So it was ab¬ 
solutely necessary for the Government, no matter at 
what cost, to take over the railroads during the great 
conflict, in order that there might not be a complete col¬ 
lapse of national sustenance. It can, therefore, easily 
be seen why there is so much complaint, and so little de¬ 
fense of the excess profits tax, for when the matter is 
reduced to its fundamental principles, it is found that 
these taxes are but a depletion of what really is the 
fund that insures the continuance of the life of Ameri¬ 
can trade. The panic, therefore, that may result from 
so uneconomic a method of taxation, may easily be of 
the most disastrous character in our history. 

It may be well in this connection, though it involves 
restatement, to recapitulate some of the leading prin¬ 
ciples which it has been the endeavor to establish in the 
preceding chapters. Had any student of economic prin¬ 
ciple been told that since Adam Smith published his 
work, in 1776, there could possibly be a recrudescence 
of the theories of the mercantile system, he would not 
have been believed. And, yet, that is exactly what is 
taking place and constitutes the chief difficulty in the 
cases that have been before the courts. To say that such 
a difficult economic problem can be reduced to the 
simple formula: “What did you pay for a specific 
lot of goods in money, and how much did you 
get for it in money” is to make the most complex ques¬ 
tion imaginable one of the utmost simplicity. Indeed, 
it is almost as simple as it is impracticable and errone¬ 
ous. It might have been safely assumed that in this 
day, at least, every one was aware “that all trade in the 


116 DOES PRICE FIXING DESTROY LIBERTY? 

“last analysis is simply what it is in its primitive form 
“of barter, the exchange of commodities for commodi- 
“ties. The carrying on of trade by the use of money 
* ‘ does not change its essential character, but merely per- 
“mits the various exchanges, of which trade is made up, 
“to be divided into parts or steps, and thus more easily 
“effected. When commodities are exchanged for money, 
“but half a full exchange is completed. When a man sells 
“a thing for money, it is to use the money in buying 
“some other thing—and it is only as money has this 
“power that any one wants or will take it.” 

Well is it said by Mr. Mill : 126 “Almost every specu¬ 
lation respecting the economical interest of a society 
“thus constituted, implies some theory of Value; the 
“smallest error on that subject infects with correspond- 
“ing error all our other conclusions; and anything 
“vague or misty in our conception of it, creates con- 
“fusion and uncertainty in everything else. Happily, 
“there is nothing in the law of Value which remains 
11 for the present or any future writer to clear up; the 
“theory of the subject is complete. * * * The word 
“Value, when used without adjunct, always means, in 
“political economy, value in exchange. * * * We 
“shall henceforth understand * * * by the value or 
“exchange value of a thing, its general power of pur¬ 
chasing; the command which its possession gives over 
“purchasable commodities in general. * * * The 
“distinction between Value and Price * * * is so 
“obvious, as scarcely to seem in need of any illustra¬ 
tion. But in political economy the greatest errors 
“arise from overlooking the most obvious truths. Sim- 
“ple as this distinction is, it has consequences with 
“which a reader unacquainted with the subject would 


12# John Stuart Mill, Political Economy, Vol. I, pages 420 to 424. 



ACT IN RELATION TO THE UNCERTAINTIES IN TRADE 117 

“do well to begin early by making himself thoroughly 
“familiar. The following is one of the principal. There 
“is such a thing as a general rise of prices. All com- 
“ modifies may rise in their money price, but there can- 
“not be a general rise of values. It is a contradiction 
“in terms. * * * Things which are exchanged for 
“one another can no more all fall, or all rise, than a 
“dozen runners can each outrun all the rest. * * * 
“That the money prices of all things should rise or fall, 
“provided they all rise or fall equally, is, in itself, and 
“apart from existing contracts, of no consequence. 
“* * * It makes no other difference than that of 

“using more or fewer counters to reckon by. The only 
“thing which in this case is really altered in value, is 
“money.” Well did Lord Coke say: “ Certainty is the 
mother of quietness and repose,” or, as has so well been 
said by the Supreme Court in the International Har¬ 
vester Case : 127 “Value is the effect in exchange of the 
“relative social desire for compared objects expressed 
“in terms of a common denominator. * * * But what 
“it would be * * * with exclusion of the actual 

“effect of other abnormal influences, and, it would seem 
“with exclusion also of any increased efficiency in the 
“machines,” * * * “is a problem that no human in¬ 
genuity could solve.” 

With our currency’s purchasing power of com¬ 
modities falling to but thirty-five per cent, of its prior 
value, as has been pointed out by Professor Fisher, the 
making of these mere counters,—this mere facility for 
turning the trade in commodities, not only a test, but the 
final and sole test is not reasonable. In a prior chapter 
it has been shown how inevitably ruin would follow if 
business men bought on “real value,” and were com- 

137 International Harvester Co. vs. Kentucky, 234 U. S. 216 (see 
page 222). 1914. 



118 DOES PRICE FIXING DESTROY LIBERTY? 

pelled to sell on “price,” even without the added diffi¬ 
culty of our depreciated and ever fluctuating currency. 
This is but one of the innumerable problems “that no 
human ingenuity could solve” 

Another, and, indeed, the most difficult element in 
business enterprise is “risk” As has been pointed out, 
if not entirely overlooked, it has been completely ig¬ 
nored, and, yet, it is one of the chief considerations of 
all Political Economists. It has been definitely determ¬ 
ined to be an absolutely essential consideration by the 
Supreme Court, even in rate cases concerning public 
utility monopolies. Adam Smith, again and again, 
treats of it with the greatest clearness. It would re¬ 
quire much space to quote all he says on the subject. 
A few passages will suffice. He observes: 128 “Profit 
“is so very fluctuating that the person who carries on a 
“particular trade cannot always tell you himself what 
“is the average of his annual profit. It is affected not 
“only hy every variation of price in the commodities 
“which he deals in, hut hy the good or had fortune both 
“of his rivals and of his customers, and hy a thousand 
“other accidents to which goods when carried either hy 
“sea or hy land, or even when stored in a warehouse, 
“are liable. It varies, therefore, not only from year to 
“year, hut from day to day, and almost from hour to 
“hour. * * * The lowest ordinary rate of profit must 
“always he something more than what is sufficient to 
“compensate the occasional losses to which every em- 
“ployment of stock is exposed. It is this surplus only 
“which is called neat or clear profit. What is called 
“ ‘gross profit' comprehends frequently, not only this 
“surplus, but what is retained for compensating such 
“extraordinary losses. * * * The chance of loss is 
“frequently undervalued and scarce ever valued more 


12 ‘ Adam Smith’s "Wealth of Nations,” Book I, Chap. IX. 




ACT IN RELATION TO THE UNCERTAINTIES IN TRADE 119 

“than it is worth. * * * In all the different employ- 
aments of stock, the ordinary rate of profit varies more 
“or less with the certainty or uncertainty of the re- 
“turns. * * * The ordinary rate of profit always 
“rises more or less with the risk. It does not, however, 
“seem to rise in proportion to it, or so as to compensate it 
“completely. * * * The presumptuous hope of suc- 
“eess seems to act here, as upon all other occasions, and 
“to entice so many adventurers into those hazardous 
“trades, that their competition reduces their profit be- 
“low what is sufficient to compensate the risk. To com¬ 
pensate it completely, the common returns ought, over 
“and above the ordinary profits of stock, not only to 
“make up for all occasional losses, but to afford a sur¬ 
plus profit to the adventurers of the same nature with 
“the profit of insurers. But if the common returns 
“were sufficient for all this, bankruptcies would not be 
“more frequent in these than in other trades.” 129 

Henry George says: 130 “ Of the three parts into 
“which profits are divided by political economists— 
“namely, compensation for risk, wages of superintend¬ 
ence, and return for the use of capital,” &c. 

Professor Ely thus states the proposition: 131 
“Profits differ from other forms of income in the de- 
“gree to which they are contingent upon successful risk 
“taking” 

Professor Laughlin says: 132 “ * * * the problem of 
“price is one which includes a study of two sets of 
“forces: (1) Those influencing the standard, and (2) 
“those influencingdlie commodities in the price lists. A 
“ change in a list of prices, in itself, implies nothing as to 

129 Adam Smith, “Wealth of Nations,” Book I, Chap. X. 

180 Henry George, “Progress and Poverty,” Chap. I, page 161. 

131 Richard T. Ely’s “Outlines of Economics,” Chap. XXV, page 

536 . 


182 Laughlin’s “Money and Prices,” Chap. Ill, page 97. 



120 


DOES PRICE FIXING DESTROY LIBERTY? 


“the cause of the change. The originating cause may he 
“operating upon gold, or upon the goods; or there may 
“he causes working at once upon both sides, opposing 
“or co-operating. It is, therefore, unsafe to dogmatize 
“upon the causes of a change in prices without an in- 
“vestigation into all the facts touching both gold and 
“goods. * * * Every owner of capital in its various 
“forms must always take the risk that invention may 
“devise something cheaper in operation than his exist- 
“ing machine .” 

Professor Taussig states: 133 “The independent 
“conduct of industry is the salient characteristic of the 
“business man’s work. He assumes the risks of the out- 
tome of industrial operations. * * * This position 
“as residual claimant explains one striking characteris¬ 
tic of business profits—the irregularity of the income. 
“In one year the business man may earn nothing, may 
“even lose. Another year he may gain great sums. The 
“variations from year to year of the same individual’s 
“profits arise from the business man’s assumptions of 
“industrial risks. * * * The business man more 

“especially feels first the effects of changes in prices. 
“When prices rise, he gains for awhile; when they fall, 
“he loses for awhile * * * So great are the risks 

“of business that many people, again, look upon it all 
“as a game of chance. * * * Courage and some de- 

“gree of venturesomeness are obviously essential to the 
“successful business man: so much follows from that 
“assumption of risks, which is of the essence of his do- 
“ings. * * * Success in business is highly uncertain. 
“Prediction as to any individual who enters it is ex- 
“tremely difficult. * * * In view of the risks and the 
“obvious possibilities of failure, must there not be some 
“prizes to maintain the resort to the occupation?” 

133 p \y Taussig’s Principles of Economics,” Vol. II, Chap. 49, 
pages 158, 159, 160 and 164; also Chap. 50, page 173. 



ACT IN RELATION TO THE UNCERTAINTIES IN TRADE 121 

Under the same heading comes, of course, “Re¬ 
placement.” Again, all economic thinkers agree. Adam 
Smith says: 134 “ When any expensive machine is erected 
“the extraordinary work to be performed by it before 
“it is worn out, it must be expected, will replace the 
“capital laid out upon it with at least the ordinary 
profits.” And he applies this to trained men as 
well as to machinery. Professor Turner treats this 
subject as follows: 133 “* * * * each item of the 
“merchant’s stock must normally sell at a price which 
“will replace that item with one of equal price” (this 
truth is ignored by those who support an erroneous 
construction of the Act) “together with a surplus suf- 
“ficient to cover all the costs of selling it. * * * 

“Any item failing to do this is carried at a loss; and 
“the merchant who continues to carry items at a loss 
“will see his stock diminish and ultimately disappear. 
“Likewise, a manufacturing plant gradually dimin¬ 
ishes in worth unless the items composing it produce 
“a sum sufficiently large to enable the owner to pur- 
“chase another item of the same character, which, in 
“turn, will produce enough to install its successor. 
“ * * * * upon applying this reasoning to a manufac- 
“turing plant, in which heavy fixed capital is involved, 
“it will follow that in many cases sudden changes will 
“involve heavy social losses.” 

Professors Ely and Wicker set forth: 136 “A man 
“is facing business ruin who takes and consumes as 
“profits from his plant what should be set aside for its 
“upkeep and replacement. The same may be said of 
“the payment to provide against risk, which may be 


134 Adam Smith’s “Wealth of Nations,” Book I, Chap. X. 

135 Turner’s Introduction to Economics, Chap. 25, page 569. 
13ft Ely and Wicker’s “Elementary Economics” (Revised), page 


359- 



122 


DOES PRICE FIXING DESTROY LIBERTY? 


“called insurance. The amount of money which a 
“careful lousiness man sets aside fromj the unusual 
“gains of prosperous years to secure himself against 
“ disaster from losses in lean years is not profit.” 

A single plant is known which though now making 
large contributions to the supply of necessaries, and 
earning substantial profits that may prove purely illu¬ 
sory did not pay any return for over thirty years. Could 
anything better illustrate the absurdity of indictment 
for its present transactions than the proof that it at last 
was making a large percentage of profit, especially as 
the high prices now prevailing must mean more lean 
years to come ? 

A most highly instructive instance of the uncer¬ 
tainty of money is given by Professor Fisher: 137 “A 
“farmer inquired from the manufacturer the present 
“price of a certain type of buggy, such as he had bought 
“once before. The price quoted seemed to him out¬ 
rageously high, and he accused the manufacturer of 
“ ‘profiteering/ reminding him of what the former 
“price of the buggy had been. The manufacturer 
“* * * * discovering that the farmer had pre¬ 

viously paid for such a buggy by a shipment of wheat 
“* * * replied: ‘If you will ship to me for the 

“new buggy the same amount of wheat you shipped for 
“your old one, I will gladly ship you the buggy, and, 
“in addition, will ship you a piece of household furni- 
“ture and a good kitchen stove/ In short, everybody 
“is eager to take advantage of rising prices, but feels 
“aggrieved if anybody else snatches the advantage 
“away. Thus the high cost of living becomes a veritable 
“ 1 apple of discord.’ * * * The fact is that among 


187 Fisher’s “Stabilizing the Dollar,” Chap. Ill, Sec. 14, page 
73; also Sec. 15, page 75 



ACT IN RELATION TO THE UNCERTAINTIES IN TRADE 123 


44 the worst consequences of price convulsions are the 
“vicious remedies proposed.” 

There is a preponderance of further authority 
upon the subject, from the writings of economists, but 
we will turn now to some of the determinative decisions 
of the Supreme Court upon this phase of our inquiry. 

Of course, as has been pointed out by the Supreme 
Court, where it is dealing with monopolistic enterprises, 
the rules are far different from those “concerning the 
ascertainment of value under contracts of sale,” as in 
the Omaha Case 138 . But, even in such cases, the rules 
stated have been clearly applied, and there is no differ¬ 
ence between economic and judicial opinion. 

The great distinction rests on the legal principle 
that the law always requires the best evidence possible 
in every case. The best evidence of price is market 
price ,—the price fixed by the joint inquiry and judg¬ 
ment of the world through its free competitive forces. 
Where that result is thus reached, no other evidence is 
admissible on the point. On the other hand the best 
evidence of excessive price is price fixed by monopoly, 
by private greed. So that it follows inevitably, in 
those instances where there can be no fair competition, 
where monopolistic condition is paramount, the State 
must assume control,—not that this is desirable, nor 
can ever be satisfactory, but that it is absolutely neces¬ 
sary to prevent a part of the taxing power being exer¬ 
cised by individuals,—and thus establishing “taxation 
without representation. ’ ’ 

Referring again to the Knoxville Case 139 , Mr. Jus¬ 
tice Moody there said: 4 4 Before coming to the question 
“of profit at all, the Company is entitled to earn a suf- 

188 Omaha vs. Omaha Water Co., 218 U. S. 180 (see page 203). 
1910. 

139 Knoxville vs. Water Co., 212 U. S. 1 (see page 13). 1909. 



124 DOES PRICE FIXING DESTROY LIBERTY? 

“ficient sum annually to provide not only for current 
“repairs, but for making good the depreciation and 
“replacing the parts of the property when they come 
“to the end of their life. The company is not bound 
“to see its property gradually waste, ivithout making 
“provision out of earnings for its replacement. It is 
“entitled to see that from earnings the value of the 
“property invested is kept unimpaired, so that at the 
“end of any given term of years the original investment 
“remains as it was at the beginning. It is not only the 
“right of the Company to make such a provision, but 
“it is its duty to its bond and stockholders, and, in the 
“case of a public service corporation at least, its plain 
“duty to the public. If a different course were pur 
“sued * * * this course would lead to * * * 
“a disaster either to the stockholders or to the public, 
“or both.” 

The Court properly deals with replacement 
“value” and not merely “price”; and exactly the same 
rule necessarily applies to “stock” that applies to ma¬ 
chinery or any other property. Stock is the real thing, 
not the counters by which it may at any moment be 
measured, and the wasting away of that real thing 
brings the predicted and certain ruin that follows its 
continuance. 

In view of these vital principles, investigation has 
been made to ascertain the various questions—the 
“thousand other accidents” spoken of by Adam Smith 
—that must and only can be guessed at in the sale of 
commodities. In view of the fact that there has 
been discussed the opinion of Judge Faris in United 
States vs. Cohen 140 relating to an indictment un¬ 
der the Act for an alleged unfair price in a sugar 
sale, an examination has been made into the un- 


140 United States vs. Cohen, 264 Fed. Rep. 218. 1920. 



ACT IN RELATION TO THE UNCERTAINTIES IN TRADE 125 


certainties appertaining to the manufacture of that 
commodity. The mathematical problem reduces it¬ 
self to this question: “What price must a man ask 
“for sugar, which, after the deduction of many other 
“sums which cannot possibly be stated, will leave a 
“remaining sum that will satisfy any jury that no 
“more than a reasonable profit has been made?” This 
problem reminds us of the teasing questions put to 
children beginning arithmetic, such as: “If a boy 
had thirteen marbles and his sister gave him a plate of 
ice cream, how many crows would it take to eat up the 
corn which his father was going to plant?” Well has 
the Supreme Court said that such guessing is not a ju¬ 
dicial function, that: “To compel men to guess on 
“peril of indictment what the community would have 
“given for their wares, if the continually chang¬ 
ing conditions were other than they are, to an un¬ 
certain extent; to divine prophetically what the re¬ 
action of only partially determinate facts would be 
“upon the imagination and desires of purchasers, is 
“to exact gifts that mankind does not possess.” 141 

Of course, the contention as to the Lever Act is 
that men have so far lost their freedom under it that 
these “reactions” are no longer to be permitted to take 
place—an unthinkable proposition to any one familiar 
with the world of business. We may well ask with the 
Supreme Court, in United States vs. Trans-Missouri 
Freight Association: 142 “What is a fair and reason¬ 
able profit? That depends sometimes upon the risk 
“incurred. * * * It is quite apparent, therefore, 

“that it is exceedingly difficult to formulate even the 


141 From the opinion of Mr. Justice Holmes in International 
Harvester Co. vs. Kentucky, 234 U. S. 216 (see page 224). 1914. 

143 United States vs. Trans-Missouri Freight Assn., 166 U. S. 
290 (see page 331). 1897. 



126 DOES PRICE FIXING DESTROY .LIBERTY? 

“terms of the rule itself. * * * While even after 

“the standard should be determined there is such an 
“infinite variety of facts entering into the question 
“* * * that any individual shipper would in most 

“ cases be apt to abandon the effort to show the un- 
“ reasonable character of a charge, sooner than hazard 
“the great expense in time and money to prove the 
“fact.” 

In the case of commodities, the difficulties are a 
thousandfold greater, and under this merciful Act the 
business man not only has the expense and trouble 
mentioned, but, if his business is to go on, he must make 
the attempt under the further inducement of knowing 
that if for any sales he is indicted and brought to trial 
and the jury should not approve his results, he might 
go to jail, and suffer consequent loss of business and 
property. 

If such an interpretation of this statute is a pos¬ 
sibility, both Liberty and business will surely die. 
There is unquestioned power to make and execute laws, 
but there is no power to do more than pretend to re¬ 
verse mathematical truths or avoid the results of at¬ 
tempts to defy them. No man can deduct from known 
quantities the unknown, and, beyond any reasonable 
doubt, mathematically define the answer. 

Let us, again, turn to the Cohen Case. 143 The whole 
charge was that he had bought sugar at one price and 
sold it at another. This fact caused the Judge to feel 
it necessary to guard against the indignation that he 
felt. But, in the first place, the rule of freedom, under 
which men have acted for centuries, always allowed 
a man to ask for his own property, or to offer as much 
or as little for the goods of another as he chose, and 


143 United .States vs. Cohen, 264 Fed. Rep. 218. 1920. 



ACT IN RELATION TO THE UNCERTAINTIES IN TRADE 127 

thus, through bartering, to reach that normal price to 
which markets always tend. “Undoubtedly,” said the 
Supreme Court 144 , “as a general rule, the seller wants 
“to get the highest price for his property, and the pur¬ 
chaser wishes to give the lowest, and in that sense it 
“may be said that an expected difference between the 
“parties is to be implied in every case.” Can a real 
market ever exist, where one party must trade on mar¬ 
ket conditions alone, whilst the other has this same op¬ 
portunity plus a power of appealing for the aid of the 
District Attorney ? Is the rule hereafter to be that hu¬ 
man characteristics and methods, universally existing 
and applied, are all to become the basis for a charge of 
crime, and that the law, in attempting to reach that 
equality and fairness which constitute justice, is going 
to allow those wishing to buy commodities produced by 
others to beat down the prices, whilst those who have 
added to the world’s supply are to defend their rights 
in bargaining by a threatened intervention by the State 
that may end in their ruin as well as their loss of 
liberty ? 

But let us return to our sugar case and ascertain a 
part of the guesses that could not be answered if such a 
case were fairly tried. 1. Under existing conditions, 
what must be the amount of taxes to be deducted, Na¬ 
tional, State and Municipal? Would it be fifty per cent, 
and upward, as at present, or eighty, or ninety, or one 
hundred ? 2. What is the exact percentage of plant idle¬ 
ness through failure of raw sugars and materials to 
arrive, by reason of never ceasing strikes, embargoes 
and like contingencies, and the impossibility at times of 
procuring necessary supplies of coal ? Every one knows 
that the cost of production not only may, but does, go 

144 In Omaha vs. Omaha Water Co., 218 U. S. 180 (see page 
195). 1910. 



128 


DOES PRICE FIXING DESTROY LIBERTY? 


up by leaps and bounds, as output decreases. 3. What 
are the increases in cost price going to be? We know 
that labor has advanced from fifteen cents to fifty-five 
cents an hour. We know that coal has advanced from 
two and one-half dollars a ton to sixteen and one-half 
dollars, and raw sugars have mounted from $.0327% 
to $.2462 per pound. One hundred per cent, ad¬ 
vance in price for this commodity, therefore, is really 
very insignificant. We know that some sum must be 
allowed to stimulate improvement, inventive genius 
and production, if the present scarcity is not to con¬ 
tinue. At what sum are enterprising business men to 
be permitted to fix that item, without inviting ruin and 
a loss of their freedom and consequent usefulness? 
4. We know it is vital that, if these improvements in 
plant are stimulated, an enormous amount of property 
must be discarded and scrapped in order that the pub¬ 
lic may receive the benefit. As an instance of this con¬ 
stant occurrence by reason of an improvement in the fil¬ 
ters used in refineries, sugar plants are scrapping a very 
expensive portion of their machinery. What sum are 
they to determine, in advance of unknowable inventions 
which should be applied for this purpose ? 5. All men 
who have given any attention to economic thought 
know that risk taking in trade constitutes the chief dif¬ 
ference between business men and wage workers. With¬ 
out it, the world would never have reached its present 
necessary production. What is the proper sum to be 
allowed in any or all cases to provide for this most es¬ 
sential element ? 6. And what sums are to be charged, 
not merely for the losses of the past, but for the losses 
of the future? We start with the advantage, in this 
respect, that hope so predominates over fear that this 
sum is rarely, if ever, estimated in sufficiently large 
amount. 7. What sums should be allowed for the losses 


ACT IN RELATION TO THE UNCERTAINTIES IN TRADE 129 


that are sure to arise in the times of such advances 
that have taken place, for the failure or refusal of the 
foreign producer of the necessary raw materials to 
make delivery to purchasers who, upon the faith of their 
contracts, have, in turn, sold against such contracts? 
8. What sums should be reserved to cover penalties, 
fines, or the expenses and costs of litigation of those 
who may have honestly differed with the government’s 
enforcing officers. It cannot easily be ascertained how 
enormous these unknowable items have already been 
even in cases where those charged with a violation of 
the Act have been exonerated by the Court, or ac¬ 
quitted by the jury. 9. What sum must be calculated 
to cover the enormous variation in the value of money 
that has taken place, and which has really turned all 
business into a most dangerous gamble ? 10. And what 
sum, under all these conditions, is a man fairly to be 
allowed for the fact that from his profit he must buy 
his living from others whose commodities have like¬ 
wise enormously increased, if not in value, at least in 
price? Are some to be denied the equal protection of 
the law in this respect, and others given it ? That must 
in such case be the inevitable effect! If justice is to be 
done, all these questions, and many more like them, must 
be answered, even though it is beyond the power of 
the human intellect to do so. Of course, the difficul¬ 
ties enumerated are passed along the line. The manu¬ 
facturer has to meet it; the wholesaler, in turn, is gov¬ 
erned by what the manufacture has to guess at, before 
the retailer has his turn. 

If this be called theory, let us turn to real facts, and 
reason that from what has happened we may form a 
fair conclusion as to what may happen. Let us con¬ 
tinue with the sugar case, as that is the most discussed 
subject. 


130 


DOES PRICE FIXING DESTROY LIBERTY? 


In the case recently decided of United States vs. 
United States Steel Corporation, is found an enuncia¬ 
tion of a great truth: 145 “ It has become an aphorism that 
“there is danger of deception in generalities, and in a 
“case of this importance we should have something 
“surer for judgment than speculation, something more 
“than a deduction equivocal of itself, even though the 
“facts it rest on or asserts were not contradicted. If 
“the phenomena of production and prices were as easily 
“resolved as the witness implied, much discussion and 
“much literature have been wasted, and some of the 
“problems that are now distracting the world would 
“have been given composing solution. Of course, com¬ 
petition affects prices, but it is only one among other 
1 ‘ influences, and does not more than they register itself 
“in definite and legible effect.” 

It is no doubt because of this truth that our law 
of Freedom, our law that lets all of the people take part 
in finding natural values and fair and reasonable prices, 
has, in the end, always asserted its triumphant and nec¬ 
essary superiority. If there be at last found a method 
by which business men can reduce all these uncertain¬ 
ties to that degree of proof necessary for criminal con¬ 
viction, may it not be asked why Congress did not an¬ 
nounce it, instead of imposing a task impossible of 
performance upon business men and the Courts? 

It is fortunate that in dealing with the sugar cases 
arising under the Act we have an illustration of the 
wisdom of settled principles, where the history of the 
matter and its results have so largely become public 
property. Raw sugar has, within recent years, sold as 
low as $.0327% per pound. Notwithstanding the 
War, Mr. Herbert Hoover, with the aid of the Refiners, 

148 In United States vs. United States Steel Cororation, 251 U 
5 . 417 (see page 448). 1920. 




ACT IN RELATION TO THE UNCERTAINTIES IN TRADE 131 


purchased it at five and one-half cents per pound, with 
the result that it became relatively the cheapest of all 
food commodities, and with the natural result that it 
advanced enormously in consumption. It is important 
to remember that everybody was left free to buy or 
not to buy, and that there was no interference with the 
liberty of trade. All that Mr. Hoover really did 
was, with rare good judgment, to foresee conditions and 
make a wonderfully advantageous purchase, and sub¬ 
sequently to fix his own selling terms, thereby giving 
the benefit of his endeavors to the people at large. He 
made no one sell to him or buy from him, but left each 
dealer free to accept his terms or do as he pleased 
otherwise. Prohibition laws and the increased con¬ 
sumption from the unnatural price established as com¬ 
pared with other commodities necessarily enormously 
increased the demand, indeed, to an extent that has not 
yet been measured because of the inadequacy of avail¬ 
able supply. Matters were, so successfully handled 
that the President of the United States thereafter re¬ 
ceived a further offer of another year’s crop of raw 
sugar at the price of only six and one-half cents per 
pound. This price, however, was double that at which 
sugar had actually sold under normal conditions. Had 
he accepted it, this discussion, as far as sugar is con¬ 
cerned, would have been entirely unnecessary. But, 
though he had the advantage of all the resources of 
the National G-overnment to guide him, he refused to 
purchase. Now, this is not stated by way of criticism, 
because the great majority of those expert in the trade 
were unwilling to purchase adequate supplies at a sim¬ 
ilar price. Moreover, since that time duty paid raw 
sugars actually have been purchased, and in far less 
quantities than was called for and desired, at upward 
of twenty-four and one-half cents a pound. This fig- 


132 DOES PRICE FIXING DESTROY LIBERTY? 

ure is between three and four hundred per cent, in¬ 
crease over the price which some of the ablest men in 
the business in this country felt was too high pre¬ 
viously thereto, and, no doubt, honestly so felt. We 
see how easy it is for even the most expert men to fail 
in reaching a correct conclusion on these unascertain- 
able and difficult questions. To say, therefore, that 
those men who in rare exceptions had guessed the mar¬ 
ket price of sugar correctly, or probably less than half 
correctly, as to the prices that they would be compelled 
to pay for the replacement of their stock, for no other 
reason than their sales at this inadequate price, had 
acted criminally, seems preposterous. 

Of course, it may be a theoretical estimate, but 
there is a general conclusion among economists that 
only about one man in every ten succeeds who assumes 
these risks of business. The rest fail chiefly because 
of the constant variation and inevitable losses of those 
taking the risk in business not even averaging with the 
possible gain. This again demonstrates Adam Smith’s 
contention that the ever present tendency is for hope 
unwisely to overbalance fear. 

Business will not and cannot go on, or production 
continue, much less increase, if, when the occasional 
year of profit comes, it is to be made more dangerous 
and cruel than even the years of loss. It is probable 
that most, if not all, of the men now under indict¬ 
ment for sugar profiteering were only indicted because 
of a failure on the part of the Government to distin¬ 
guish between “price” and “value”; and, when the 
cycle that constitutes business is completed and their 
stock replaced, they will find that they are much 
poorer instead of richer than if they had been guided 
by “value” instead of mere “price.” They will wish 
that they had adhered to Adam Smith and all his fol- 


ACT IN RELATION TO THE UNCERTAINTIES IN TRADE 133 


lowers, instead of losing sight of the truth by an at¬ 
tempt to re-establish the impossible mercantile system. 

And again it must be recalled that of the many con¬ 
siderations involved, the present value of our cur¬ 
rency approximates only thirty-five per cent, of 
its former value. Therefore, a dealer, to obtain 
for himself an “exchangeable value” that will en¬ 
able him “to replace his commodities” or obtain 
other commodities in equal quantity must, without 
regard to all the other complications and difficul¬ 
ties, receive above three hundred per cent, of his former 
prices. For the Act to punish him for doing so, is to 
penalize him for trying to safeguard against the ruin 
of his business. 

Something should be said of the opinion of Judge 
Hazel in the Weed case, 146 for it may well be used as 
a basis for summarizing the conclusions already stated. 
Although he says: ‘ ‘ Candor compels the admission that 
the objection of uncertainty is not altogether free from 
doubt,” he, like the other Judges of the lower Courts, 
makes no examination at all as to the real meaning of 
the Act, or as to the serious Constitutional questions 
that are raised by interpreting it to mean that all the 
prior doctrines of our common and statute law are 
swept away by his assumed interpretation. He sup¬ 
ports his decision that the Act is constitutional upon 
the basis of legal principles which abrogate the Consti¬ 
tution itself, and so far as commodities are concerned, 
upon principles which will establish Communism in 
this country. It is submitted that if his contentions 
be correct, Mr. Justice Brewer’s classical opinion in 
the Monongahela Case, 147 so constantly followed and 

149 Weed & Co. vs. Lockwood, 264 Fed. 453. 1920. 

147 Monongahela Navigation Company vs. United States, 148 U. 
S. 312. 1893. Justice Brewer said (page 324) : “The question 



134 DOES PRICE FIXING DESTROY LIBERTY? 

maintained heretofore, has ceased to have any purpose 
or effect, and that many other Supreme Court decisions 
are likewise overruled. And this is particularly true 
from Judge Hazel's conclusion that if any things can 
properly be defined as “necessaries,” in which of 
course the public has an interest, “the Lever Act does 
“not deprive any one of his property without due pro- 
“cess of law, it merely limiting the rate of charge for 
“dealing in or with any necessaries.” “For the fore¬ 
going reasons,'’ he says, ‘ ‘ I am of the opinion that this 
“Court ought not to declare unconstitutional the pro¬ 
vision to which exception is taken by the defend¬ 
ant .” 148 In other words, the decision in the case, if it 
be correctly understood, would lead to the conclusion 
that the Judges have been continually in error, at least 
from the time of Lord Chief Justice Coke, who it will 
be remembered said , 149 “for what is the land but the 
“profits thereof,” to the case of Cleveland vs. Backus 150 


presented is not whether the United States has the power to condemn 
and appropriate this property of the Monongahela Company, for that 
is conceded, but how much it must pay as compensation therefor. 
Obviously, this question, as all others which run along the line oi 
the extent of the protection the individual has under the Constitution 
against the demands of the government, is of importance; for in 
any society the fullness and sufficiency of the securities which sur¬ 
round the individual in the use and enjoyment of his property con¬ 
stitute one of the most certain tests of the character and value of 
the government. The first ten amendments to the Constitution, 
adopted as they were soon after the adoption of the Constitution, 
are in the nature of a bill of rights, and were adopted in order to 
quiet the apprehensions of many, that without some such declara¬ 
tion of rights the government would assume, and might be held to 
possess, the power to trespass upon those rights of persons and 
property which by the Declaration of Independence were affirmed 
to be unalienable rights.” 

148 Weed & Co. vs. Lockwood, 264 Fed. Rep. 453 (see page 456). 
1920. 

149 Littleton, 4 b. 

150 The Cleveland, Cincinnati, Chicago & St. Paul Railway Com¬ 
pany vs. Backus, 154 U. S. 439. 1894. 




ACT IN RELATION TO THE UNCERTAINTIES IN TRADE 135 

and down to Branson vs. Bush, 161 decided by the Su¬ 
preme Court in November, 1919. Mr. Justice Clarke, 
in direct contradiction to such a conclusion, there says: 
“The value of property results from the use to which 
“it is put and varies with the profitableness of that use, 
“present and prospective, actual and anticipated. There 
“is no pecuniary value outside of that which results 
“from such use” 

The Fifth Amendment is really of no consequence, 
if all that is necessary to deprive citizens of their prop¬ 
erty is for a Court to determine that the public needs 
the property, and, therefore, has a right to impair or 
destroy that which alone constitutes its value. If this 
really be the law, the inspiring opinion of the Supreme 
Court in the Monongahela Case 152 has been overruled. 
The great necessity for a commodity naturally increases 
its value. But it is contended that that which creates 
value deprives it of the protection which the Constitu¬ 
tion gives it. However, the Supreme Court, in the case 
just mentioned, said: 153 “Obviously, this question, as all 
“others which run along the line of the extent of the 
“protection the individual has under the Constitution 
“against the demands of the Government, is of impor¬ 
tance, for in any society the fullness and sufficiency of 
“the securities which surround the individual in the 
“use and enjoyment of his property constitute one of 
“the most certain tests of the character and value of 
“the Government. * * * Illegitimate and unconsti¬ 
tutional practices get their first footing * * * by 
“silent approaches and slight deviations from legal 
“modes of procedure. This can only be obviated by 


161 Branson vs. Bush, 251 U. S. 182. 1919. 

162 Monongahela Navigation Company vs. United States, 148 
U. S. 312. 1893. 



136 


DOES PRICE FIXING DESTROY LIBERTY? 

“adhering to the rule that constitutional provisions for 
“the security of person and property should be liber- 
“ally construed. A close and liberal construction de¬ 
prives them of half their efficiency, and leads to grad¬ 
ual depreciation of the right, as if it consisted more 
“in sound than in substance. It is the duty of Courts 
“ to be watchful for the constitutional rights of the citi- 
“zen, and against any stealthy encroachments thereon. 
“Their moto should be obsta principiis 

Certainly the Supreme Court was wrong in think¬ 
ing that the danger to the Constitution was “in silent 
“approaches and slight deviations’’ and in “stealthy 
“encroachments,” if all the purposes of the Constitu¬ 
tion were to be swept away by a simple finding of the 
Judge that property was of sufficient value to be a. 
public need. It can be believed that the worst and most 
despotic Government that ever existed did not take any 
property that was of no use. Even in the case of monop¬ 
olistic enterprises, where some public check has been 
held to be necessary, no such doctrine has ever been 
applied as that the greater the value the smaller the 
right to Constitutional protection. It is certainly not 
construing the words “private property” “liberally” 
to hold that, although it is unqualified in the Constitu¬ 
tion, it is to be read and confined to “private property 
of no use.” But the Constitution cannot thus be frit- 
ered away, as the Courts have said so many times, and 
as early said in the Prigg Case, 154 and even in the Craig 
Case. 155 

It has already been shown what a disastrous effect 
such a ruling will have upon production. There 
are some other phases of this opinion which can- 


154 p r igg vs . Pennsylvania, 16 Peters 539 (see page 612). 1842. 
166 Craig vs. Missouri, 4 Peters 410. 1830. 



ACT IN RELATION TO THE UNCERTAINTIES IN TRADE 137 

not go without comment. Judge Hazel then con¬ 
tinues: 156 “Presumably, Congress intentionally used 
“the words ‘unjust or unreasonable rate or charge’ 
“without qualification or the inclusion of a max¬ 
imum price or standard to the end that there be 
“a determination by the jury * * * in view of 
“existing economic conditions.” But he continues, 
properly: “In determining such question it is essen¬ 
tial to consider all the facts and circumstances, what- 
“ever they may be, relating to the exacted rate or 
“charge,” having, however, frankly said further in the 
opinion that: 157 “Candor compels the admission that 
“the objection of uncertainty is not altogether free 
from doubt.” It is, however, believed that had he ex¬ 
amined the real economic principles involved, he must 
have concluded that there could be no doubt that the 
Act as he assumed its meaning was unconstitutional; 
that even because of his own grave doubts upon this 
question of Constitutionality, he would have interpreted 
the Act to be in pari materia to the Common Law and 
the Sherman Act. He would not have supposed that 
the class of monopolistic enterprises, because of the ne¬ 
cessity of curbing monopolies, established a general 
rule. On the contrary, he should have seen that be¬ 
cause they could not properly be curbed by the better 
rule of freedom in trade, where prices would be fixed 
in free competition, the cases of monopolies constituted 
an exception to the general rule. As he himself points 
out : 158 “It is essential to consider all the facts and cir¬ 
cumstances” in matters where the most essential per¬ 
haps are inevitably still contained in the womb of the 
future. 

150 Weed vs. Lockwood, 264 Fed. Rep. 453 (see page 456). 1920. 

167 Id., page 457. 

158 Weed vs. Lockwood, 264 Fed. Rep. 453 (see page 456). 1920. 



138 


DOES PRICE FIXING DESTROY LIBERTY? 


As has been pointed out, no one can tell what taxes 
may be levied; no one can tell what the risks of busi¬ 
ness may be; no one can tell what the replacement cost 
may total; every one that enters business has to guess 
at these and a thousand other factors—and nine men 
out of ten in the long run guess at them incorrectly,— 
to their ruin. 

Of course, the learned Judge would be right had the 
Weed case fallen within the principle of the Nash 
Case ; 159 but the Supreme Court has, again and again, so 
plainly marked the distinction between it and the Har¬ 
vester, 160 Collins 161 and Pennsylvania Railroad 162 Cases, 
which have been discussed, that it is perplexing to un¬ 
derstand why there should be any conflict or difficulty in 
arriving at the one correct result. To repeat, again, 
where all the facts and circumstances are known, ordi¬ 
narily intelligent men can reasonably and lawfully make 
deductions from them. With a preponderance of evi¬ 
dence, men can find only from their common expe¬ 
rience whether they have exercised the care of reason¬ 
able men, or whethey they have complied with certain 
duties, even where they have intended the natural con¬ 
sequences of their acts. But the cases where these fun¬ 
damental rules of conduct have been laid down deal gen¬ 
erally with Common Law wrongs. When, however, it 
comes to dealing with property and exercising the prop¬ 
erty rights appertaining to freemen, there has been 
built up and safeguarded an absolutely different sys¬ 
tem. It has become fundamental that men should com¬ 
pete with each other with an absolute and untrammeled 
freedom of discretion, and it is not only the best sys- 


159 Nash vs. United States, 229 U. S. 373. 1913. 

160 Harvester Co. vs. Kentucky, 234 U. S. 216. 1914. 

181 Collins vs. Kentucky, 234 U. S. 634. 1914. 

182 U. S. vs. Pennsylvania R. R., 242 U. S. 208. 1916. 



ACT IN RELATION TO THE UNCERTAINTIES IN TRADE 139 

tem, but the only system that is practicable in a free 
country. 

Reviewing the authorities to which Judge Hazel 
refers in his opinion, it may be noted that the cases he 
cites are plainly and clearly within the Nash Case 163 
and as plainly and clearly distinguishable from and 
unlike the Collins 164 or Harvester Cases, 165 and do not in 
any way touch the present matter. The Fox Case, 166 
to which he refers, could not have been decided other¬ 
wise than it was. Mr. Justice Holmes there repeats 
what has been contended for that “so far as statutes 
“fairly may be construed in such a way as to avoid 
“doubtful constitutional questions, they should be so 
construed”—a rule of law that has been disregarded in 
all the cases under the Lever Act—and shows that the 
offense there was plainly wrongful because it was an 
encouragement to a positive breach of law. 167 The Mil¬ 
ler Case, 168 cited by Judge Hazel, was one of gross and 
perhaps criminal negligence, and the Supreme Court 
properly says in its opinion: “The case falls, there¬ 
fore, under the rule of Nash vs. United States, and not 
“under the rule of International Harvester Co. vs. 
“Missouri”—recognizing the distinction which none of 

163 Nash vs. United States, 229 U. S. 373, hi. 

194 Collins vs. Kentucky, 234 U. S. 634. 1914. 

165 Harvester Co. vs. Kentucky, 234 U. S. 216. 1914. 

198 Fox vs. State of Washington, 236 U. S. 273. 1915. 

167 In Fox vs. Washington, supra, a statute made criminal the 
editing of printed matter tending to encourage or advocate disre¬ 
spect of law. The defendant edited an article that tended to en¬ 
courage the breach of the State laws against indecent exposure. The 
defendant contended that the statute was an unjustifiable restriction 
of liberty and too indefinite for a criminal statute. The statute was 
held constitutional and the conviction affirmed. 

168 Miller vs. Strahl, 239 U. S. 426. 1915. The case concerned 
a police statute, in which keepers of hotels were required to give 
notice to guests in case of fire. It was held that the statute 1 was not 
void for uncertainty in not prescribing rules of conduct in other than 
general terms. 



140 


DOES PRICE FIXING DESTROY LIBERTY? 


these learned Judges in the lower Courts have referred 
to or recognized. 

And finally in the Omaechevarri case, 169 to which 
Judge Hazel refers upon the point that rules of con¬ 
duct must necessarily be expressed in general terms 
and depend upon varying circumstances, it was clearly 
pointed out that in a criminal statute general provisions 
are not necessarily in violation of constitutional rights 
where common experience in the subject matter ren¬ 
ders such terms definite. The Court said in this case, 
construing an Act regulating sheep rangers: “Men 
“familiar with range conditions and desirous of ob¬ 
serving the law will have little difficulty in determin¬ 
ing what is prohibited by it.” This decision, there¬ 
fore, is directly contrary to that arrived at by Judge 
Hazel in the Weed case. 170 

Consequently a close analysis of the Weed Case 
forces the conclusion that the broad, underlying princi¬ 
ples of constitutional rights and of economic necessities 
have been almost completely disregarded in the course 
of reasoning which brought the Court to its decision. 
Furthermore, that the Circuit Court of Appeals, al¬ 
though it turned aside from the contentions and author¬ 
ities given so much weight in the Court below, and based 
its affirmance principally upon the exigencies of a great 
conflict ended, nevertheless failed to realize that the 
remedy, for the ills of which the Act was intended to 

169 Secundino Omaechevarria vs. Idaho, 246 U. S. 343. 1918. A 
statute of Idaho, in order to avert clashes between sheep herdsmen 
and cattle rangers, prohibited any person having charge of sheep 
from allowing them to graze on a range usually occupied by cattle. 
The object of the statute was to prevent the encroachment of sheep 
upon cattle ranges, resulting in driving out the cattle and impairing 
the industry. It was contended that the act was indefinite in its 
terms. The court held that the act was to be interpreted in the 
light of the common experience and knowledge of those familiar 
with the subject matter of the statute. 

170 Weed & Co. vs. Lockwood, U. S. Atty., 264 Fed. 453. 1920. 



ACT IN RELATION TO THE UNCERTAINTIES IN TRADE 141 


be curative, lay in a reaffirmance of the principles of 
free competition in trade, by which only, through forces 
naturally operating, prices of commodities could be 
maintained at a level fair, just and non-excessive. 

There are no men so gifted with wisdom and pre¬ 
science who can tell what future replacements will 
. cost, what future taxes are to be or when levied, what 
strikes, what transportation difficulties, what idleness, 
what storms, what droughts, what earthquakes, what 
fires, what wars, what revolutions, what crop failures, 
and really what everything else is going to be. 

As has been pointed out, the general tendency is 
to underestimate these things, just as the President of 
the United States underestimated them in the case of 
sugar. 

The sugar refining industry affords a striking il¬ 
lustration of the uncertainties for which due allowance 
should be made in determining prices. A Refiner, hav¬ 
ing in mind the possible results of these uncertainties, 
inquired of the greatest Insurance Agency in the world 
what would be the rate of insurance against a decline 
from the high prices of its supplies of raw sugars, 
owned or under contract. 

The correspondence is so interesting and instruct¬ 
ive that it may prove of real value to those engaged in 
the effort to solve the same problems. The following are 
fac-similes of the letters, but with the name of the Re¬ 
finer omitted: 

Philadelphia, May i, 1920. 

Insurance on Raw Sugar Against Depreciation in 
Market Value. 


Referring to your recent inquiry for insurance to pay 
any loss which you might sustain during the policy period 
by reason of a fall in market value on raw sugar, held or 
contracted for by you, no loss to be payable unless such 




142 DOES PRICE FIXING DESTROY LIBERTY? 

market value fell below 15c. a pound, we regret to advise 
you that we have been unsuccessful in finding any market 
for an insurance of this character. 

We have made a thorough canvass of the Insurance 
market, and, through our London correspondents, have 
thoroughly tried the market at London Lloyd’s, but have 
not obtained a single offer to write such a policy at any rate. 

We regret our inability to assist you in obtaining this 
protection, but it is our opinion that losses of this character 
are uninsurable losses at any obtainable premium. 

Yours faithfully, 

Mather & Co. 


May 29, 1920. 

Mather & Co., 

226 Walnut Street, 

Phila., Pa. 

Gentlemen:— 

After the trouble that you took in communicating with 
Lloyd’s, I dislike troubling you again, but, can you accom¬ 
plish my purpose, you will render me a great service. 

In estimating the cost of our production, we have, 
among other things, to include risk, and would very much 
like to insure this item. Raw sugars usually sell at about 
one-fourth of the present market price. We are compelled 
to buy large quantities, and, on the average, considerably 
ahead of the dates of delivery, and are under the constant 
necessity of replacing the sugars manufactured by us. If 
we have to estimate these items, we are largely guessing on 
a very uncertain and highly speculative market. Under 
these circumstances, it would be a relief to us and prevent 
misunderstandings between ourselves and the Government, 
if we could cover this risk for the periods likely to be in¬ 
volved. 

Don’t you think if you made a serious effort, and were 
able to pay say three cents a pound on a 20c. market, that 
Lloyd’s or some one else in like enterprises, might be willing 
to assume the risk for us, and, could it be arranged, I feel 
great confidence that our Board would not only approve, 
but highly appreciate your service. 

Yours truly, etc. 






ACT IN RELATION TO THE UNCERTAINTIES IN TRADE 143 


May 29, 1920. 


We beg to acknowledge receipt of your letter of May 
29th with reference to insurance to protect you against loss 
by reason of a fall in the market value of sugar held by you, 
and it is needless to say that it would be a great source of 
satisfaction to us if we could obtain this protection for you. 

In response to your inquiry for insurance of this char¬ 
acter in April we placed this matter before our London cor¬ 
respondents, who endeavored to develop a matter for this 
insurance with London Lloyd’s, whom we know to be the 
only possible source from which insurance of this character 
might be obtained, but our correspondents were unable to 
secure any quotations at any rates whatever. 

In our opinion the risk which Underwriters would take 
upon themselves in issuing such a policy would be so great 
that is could not be undertaken at even double the rate of 
three cents a pound mentioned in your letter. Indeed, con¬ 
sidering the present abnormal price of sugar we do not be¬ 
lieve that Underwriters would be warranted in writing this 
insurance at any obtainable premium. 

We greatly regret our inability to be of assistance to 
you in this instance, but to the best of our knowledge and be¬ 
lief it is quite impossible to obtain the insurance which you 
desire. 

Yours faithfully, 

Mather & Co., 

Per Joseph A. O’Brien. 


Of course, the Refiner would be entitled to a fair 
insurance risk in his calculations, whether he covered 
it with an insurance company or assumed it himself; 
and as this can easily be ascertained to amount not only 
to more than the whole general profit, but to more than 
insurance, production cost and profit put together, it 
can easily be seen how correct Adam Smith and other 
economic thinkers are in stating that it is nearly al- 





144 DOES PRICE FIXING DESTROY LIBERTY? 

ways underestimated. The explanation of this is, again, 
free competition. In order to keep their trade, men 
have a tendency to underrate possible loss, and to take 
chances in business with reference to the elements which 
are uncertain and undeterminable. Thus we have the 
high percentage of failures in business enterprises, 
where the preponderating element and distinction 
necessarily consist of risk taking. 

If the Act is to be thus interpreted, Judges will 
have an impossible task in their instructions to juries 
in the cases tried before them. They will have to say, 
in effect: 

“Gentlemen, this is a criminal proceeding; 
you cannot guess men out of their Liberty; you 
must have evidence that satisfies you, beyond any 
reasonable doubt, that the defendant, in dealing 
with matters looking largely to the future, and 
about which no one can be guided except by sur¬ 
mise or guess, didn’t guess at all, but correctly 
drew deductions from the known facts and circum¬ 
stances, which could not be known at the time he 
acted. You must be guided by the knowledge and 
experience of the ordinary reasonable business man 
in determining that the defendant, beyond every 
reasonable doubt, drew improper deductions from 
known facts in fixing the prices of the necessaries 
in which he deals. You must be careful, however, 
to remember that it was impossible for him to 
know all these essential facts, and that the com¬ 
mon deductions of the ordinary man upon such 
matters are, to an excessive degree, entirely wrong. 
You are also to remember that as one section of 
the Act, itself, provides, in supplying the Presi¬ 
dent of the United States with funds for business 
purposes, that such funds are recognized as ‘re¬ 
volving* items. That is to say, that business pro¬ 
ceeds in a cycle, and, so long as it continues, is 
never completed, nor its profits really ascertain¬ 
able. That in such matters the real result is never 


ACT IN RELATION TO THE UNCERTAINTIES IN TRADE 145 

really ascertainable until the final cycle is com¬ 
pleted. But you are to ignore all this, and stop 
it anywhere you please, although you know that 
business varies, and that the profits of inflated 
years are, as a rule, more than lost in the succeed¬ 
ing years of deflation and depression. You must 
guess and you must not guess. You can reach a 
verdict in this case only by guessing, but you must 
not guess as to the facts, or consider other than the 
positive evidence (if there is any that has been 
offered) of the case.” 

The foregoing, for the purpose of emphasizing the 
difficulties arising under an erroneous interpretation of 
the Act, may have gone somewhat to the extreme of il¬ 
lustration, but it is entirely consonant with the true and 
existing conditions which a dealer faces every day in de¬ 
termining the prices of the “necessaries” which he 
offers for sale, all of which considerations should be 
given full weight by a jury, or other tribunal attempt¬ 
ing to pass upon the issue whether such prices charged 
were, in fact, unfair, unreasonable and excessive. 

No one who thinks the matter out can have any 
doubt as to what would be the final conclusion as to such 
an inquisitorial attempt. It will be exactly the result 
that has ever been reached after such attempt and 
throughout the centuries. Although to the present time 
there have been various conflicting decisions under the 
Act, there has been none in which the Court has not 
shown marked evidences of embarrassment and re¬ 
luctance. 

The final consideration of the Court in the Weed 
Case suggests a matter that seems to have been 
overlooked. It is of most vital importance, and 
involves the question whether it was not necessary for 
the (Government, through the President, to “fix the 


146 DOES PRICE FIXING DESTROY LIBERTY? 

“prices of * * * necessaries.” The opinion thus 
refers to this subject: “His failure to do so, perhaps, 
“because of its recognized futility, does not render the 
“indictment invalid.” If the President could not de¬ 
termine prices of necessaries safely and effectively, as 
was shown in the case of sugar, then far less should it 
fairly be required of his fellow citizen to make such de¬ 
cision under peril of indictment. This phase of the mat¬ 
ter is, however, not now under consideration, but a more 
serious one. A citizen, having used his best judgment 
as to prices which he fixed, and having reached a con¬ 
clusion conscientiously and without any complaint or 
threat from the Government, has, in turn, no right to 
complain. He has no right to redress where no wrong 
is threatened. But he has a constitutional right, where 
his property or its fruits are to be taken from him, 
freely to submit his contentions to a court of justice and 
have the matter judicially determined, both for his re¬ 
dress and guidance. That right has been for centuries 
the chief aim of civilization. An Act that discourages 
such procedure is both against civilization and the Con¬ 
stitution. Even a sovereign state cannot check the right 
that now “freely exists” to have proper Constitutional 
questions involving rights of citizens determined by the 
Supreme Court, as was decided in the Harrison Case 171 
and in the Wadley Case. 172 

It, of course, follows under the latter case and 
those cases which are approved and relied upon therein, 
that defendants, before they can be either fined or im¬ 
prisoned, are entitled to their day in Court, and the de¬ 
termination by some judicial tribunal of what is a fair 


171 Harrison vs. St. Louis & San Francisco Railroad Company, 
232 U. S. 318. 1914. 

172 Wadley Southern Railway Company vs. Georgia, 235 U. S. 
651. 1915. 



ACT IN RELATION TO THE UNCERTAINTIES IN TRADE 147 

and reasonable price. It also appears that by reason 
of the varying factors determining commodity cases, 
no adjudication could establish a precedent, and a con¬ 
stant recurrence of decisions would be necessary from 
day to day. The cases would become so numerous that 
it would be impossible to enforce the penalties of the 
Act, which would become as futile as if it were en¬ 
tirely without penalty. 



CHAPTER VII. 


Our Paramount Interest. 

The Supreme Court has long since declared that 
Liberty is the greatest of all rights, and it has become 
so firmly established that in relation to property rights 
it constitutes the cornerstone of all constitutional pro¬ 
tection. 

The questions constantly asked: “Why Anglo¬ 
-Saxon civilization has flourished so much longer than 
“many of its predecessors, and whether it may be 
“hoped that it will avoid the deadly fossilizaticn or 
“death of so many of its predecessors,” may find their 
complete answer in maintaining the safeguards estab¬ 
lished for the preservation of individual rights under 
its forms of government. The determination of these 
present questions by the Supreme Court involves the 
greater issue whether the tendencies to decay are to 
be further averted or to be given full swing, with all 
their deadening effects. 

Liberty, and Liberty alone, is the safeguard—the 
Liberty preserved through all these centuries. Well 
did the House of Lords say in the Nordenfelt Case : 173 
‘ 1 The public have an interest in every person carrying on 
“his trade freely; so has the individual. All interfer- 
“ence with individual liberty of action, in trading, and 
“ all restraints of trade of themselves, if there is nothing 
“more, are contrary to public policy.” As widely as 
Chief Justice Fuller and Mr. Justice Harlan differed, 


178 Nordenfelt vs. Maxim, 1894 A. C. 559. 1894. 

(149) 



150 DOES PRICE FIXING DESTROY LIBERTY? 

they both concurred that it was unlawful “to deprive 
“the public of the advantages which flow from free 
“competition.” And well did the Supreme Court say 
in Loewe vs. Lawlor: 174 “At common law, every per- 
“son has individually, and the public also has collect¬ 
ively, a right to require that the course of trade should 
“be kept free from unreasonable obstruction.” 

If it be asked why the Courts, for upward of five 
centuries, have been so continuously and constantly in¬ 
sisting upon the preservation of this Liberty, the an¬ 
swer must go deeper, but is no less clear. 

Until what the English and American jurists had 
worked out instinctively was analyzed by philosophers, 
there was no satisfactory answer to the oft made in¬ 
quiry: Why so many nations, having attained a high 
civilization from which a greater advance was to be ex¬ 
pected, suddenly became stationary, or fell into deca¬ 
dence ? Why was it that hordes of free barbarians had 
so frequently, and apparently with such ease, over¬ 
thrown much better organized and higher forms of civ¬ 
ilization? These questions were never satisfactorily 
answered until the physiological truth was realized 
that as you cannot have complete health and continuing 
growth without freedom, so you cannot have moral, po¬ 
litical and economic development without Liberty. Put 
mind, body, trade or government in too tight bonds 
and deterioration, if not death, is the inevitable con¬ 
sequence. 

But, in civilization, this tendency always exists, be¬ 
cause of the profound effects of Liberty and co-opera¬ 
tion. Liberty makes men; co-operation makes enlarge¬ 
ment of wealth. As the spider ultimately devours her 


174 Loewe vs. Lawlor, 208 U. S. 274. 1908. 



OUR PARAMOUNT INTEREST 


151 


mate after he has aided her in enlarging her progeny, 
so co-operation tends to make property the chie& end 
of society instead of Liberty and equality. Where 
wealth accumulates, there is ever the tendency for 
men to decay; and so, as Thomas Jefferson has 
pointed out: “The natural order of things is for Lib - 
“erty to yield and for Government to gain ground 
And as the enforcement of order and the protection of 
ever accumulating wealth becomes the Government’s 
chief end, Liberty is ever more and more forgotten or 
restricted. Man, placed in second place, less regarded, 
and more hampered in his free and independent devel¬ 
opment, loses character, strength, and ceases to exist 
as a power or force. All these price fixing regulations 
are putting him under the tutelage and protection of a 
host of Governmental servants employed and paid by 
him, with no other possible result than his complete 
enervation and inability to protect himself. He fol¬ 
lows the course of the faineant Kings of France and, 
like them, perishes when he comes in conflict with men 
who have remained free. 

It has been splendidly written: 

“Here is the law of progress, which will explain 
“all diversities, all advances, all halts, and retrogres¬ 
sions. Men tend to progress just as they come closer 
“together, and by co-operation with each other increase 
“the mental power that may be devoted to improve¬ 
ment, but just as conflict is provoked, or association 
“develops inequality of condition and power, this ten¬ 
dency to progression is lessened, checked, and finally 
“reversed. * * * In a general way, these obstacles 
“to improvement may, in relation to the society itself, 
“be classed as external and internal—the first oper¬ 
ating with greater force in the earlier stages of civili¬ 
sation, the latter becoming more important in the 


152 DOES PRICE FIXING DESTROY LIBERTY? 

“later stages. * * * I mean, so to speak, that the 
“garment of laws, customs, and political institutions, 
“which each society weaves for itself, is constantly 
u tending to become too tight as society develops. * * * 
“Modern civilization owes its superiority to the growth 
“of equality with the growth of association. * * * 

“Civilization is co-operation. Union and liberty are 
“its factors. The great extension of association— 
“not alone in the growth of larger and denser 
“communities, but in the increase of commerce and 
“the manifold exchanges which knit each community 
“together and link them with other though widely sep¬ 
arate communities. * * * the advances in security 
“of property and of person, in individual liberty, and 
“towards democratic government—advances, in short, 
“towards the recognition of the equal rights to life, 
“liberty, and the pursuit of happiness—it is these that 
“make our modern civilization so much greater, so 
“much higher, than any that has gone before. It is 
“these that have * * * increased productive power 
“by a thousand great inventions. * * * From first to 
“last, slavery, like every other denial of the natural 
'“equality of men, has hampered and prevented prog- 
“ress. Just in proportion as slavery plays an important 
“part in the social organization does improvement 
“cease. That in the classical world slavery was so uni¬ 
versal, is undoubtedly the reason why the mental ac¬ 
tivity * * * never hit on any of the great 

“discoveries and inventions which distinguish mod- 
“ern civilization. No slave holding peoplfe ever 
“were an inventive people. * * * To freedom 

“alone is given the spell of power which summons the 
“genii in whose keeping are the treasures of earth and 
“the viewless forces of the air. * * * To turn 

“a republican government into a despotism the basest 


OUR PARAMOUNT INTEREST 


153 


“and most brutal, it is not necessary formally to change 
“the Constitution or abandon popular elections. It 
“was centuries after Caesar before the absolute master 
“of the Roman world pretended to rule other than by 
“authority of a Senate that trembled before him. * * * 
“We honor Liberty in name and in form. We set up her 
11 statues and sound her praises. But we have not fully 
“trusted her. And with our growth so grow her de- 
“mands. She will have no half service! Liberty! It 
“is a word to conjure with. We speak of liberty as one 
“thing, and of virtue, wealth, knowledge, invention, 
“national strength and national independence, as other 
“things. But, of all these, Liberty is the source, the 
“ mother, the necessary condition. She is to virtue what 
“light is to color, to wealth what sunshine is to grain; 
“to knowledge what eyes are to sight. She is the genius 
“of invention, the brawn of national strength, the 
“spirit of national independence. Where Liberty 
“rises, there virtue grows, wealth increases, knowledge 
“expands, invention multiplies human powers, and in 
“strength and spirit the freer nation rises among her 
“neighbors as Saul amid his brethren—taller and 
“fairer. Where Liberty sinks, there virtue fades, 
“wealth diminishes, knowledge is forgotten, invention 
‘ ‘ ceases, and empires once mighty in arms and arts be- 
“come a helpless prey to freer barbarians. Only in 
“broken gleams and partial light has the sun of Lib- 
“erty yet beamed among men, but all progress hath 
“she called forth. Liberty came to a race of slaves 
“crouching under Egyptian whips, and led them forth 
“from the House of Bondage. She hardened them in 
“the desert and made of them a race of conquerors. 
“* * * Liberty dawned on the Phoenician coast, and 
“ships passed the Pillars of Hercules to plow the un- 
“ known sea. She shed a partial light on Greece, and mar- 


154 


DOES PRICE FIXING DESTROY LIBERTY? 

“ble grew to shapes of ideal beauty, words became the 
“instruments of subtlest thought, and against the scanty 
“militia of free cities the countless hosts of the Great 
“King broke like surges against a rock. She cast her 
“beams on the four-acre farms of Italian husbandmen, 
“and, born of her strength, a power came forth that 
“conquered the world. They glinted from the shields 
“of German warriors, and Augustus wept his legions. 
“Out of the night that followed her eclipse, her slant¬ 
ing rays fell again on free cities, and a lost learning 
“revived, modern civilization began, a new world was 
“unveiled; and as Liberty grew, so grew art, wealth, 
“power, knowledge, and refinement. In the history of 
“every nation we may read the same truth. It was 
“the strength born of Magna Charta that won Crecy 
“and Agincourt. It was the revival of Liberty from 
“the despotism of the Tudors that glorified the Eliza¬ 
bethan Age. It was the spirit that brought a crowned 
“tyrant to the block, that planted here the seed of a 
“mighty tree. * * * We must follow her further; we 
“must trust her fully. Either we must wholly accept her 
“or she will not stay. It is not enough that men should 
“vote; it is not enough that they should be theoreti¬ 
cally equal before the law. They must have Liberty 
“to avail themselves of the opportunities and means 
“of life; they must stand on equal terms with refer¬ 
ence to the bounty of nature. Either this, or Liberty 
“withdraws her light! Either this, or darkness comes 
“on, and the very forces that progress has evolved 
“turn to powers that work destruction. This is the uni¬ 
versal law. This is the lesson of the centuries. * * * 
“But if, while there is yet time, we turn to Justice 
“and obey her, if we trust Liberty and follow her, the 
“dangers that now threaten must disappear, the forces 
“that now menace will turn to agencies of elevation.’* 175 


171 Henry George, “Progress and Poverty,” Book X, Chap. V. 



OUR PARAMOUNT INTEREST 


155 


At this moment the most stable Government in 
the world is our own, and it is solely because, in its 
real essence, it is the most free, in the only sense in 
which Freedom really exists; where men can act at 
their own free discretion, restrained only by the necessi¬ 
ties of Justice. If the spirit of the Constitution is to 
be observed, that great instrument is always self-pre¬ 
serving. It needs only to be followed to be safeguarded. 
To the present time, the great fundamental principles 
which it buttresses have never been departed from. 
The wealth producing doctrines of free competition 
and an unhampered play of the law of supply and 
demand (as stated in the Patten Case 176 ) have ever 
been adequately protected by the Supreme Court of 
the United States. That great tribunal, however diffi¬ 
cult its task, has on the one hand defended men from 
the pernicious taxing power of monopoly, whilst, on 
the other, it has as certainly defended our citizens in 
their rights both freely “to pursue happiness,” through 
all that is necessary to preserve untrammeled compe¬ 
tition in commodities, and* freedom from threat or 
danger of persecution. It has always shown a con¬ 
sciousness that excess profits are, of necessity, the re¬ 
sult of excess needs, but their only permanent cure. 
Whilst Governmental necessity has unfortunately re¬ 
sulted in such profits being, in greater part, diverted 
to Governmental needs, and thus inevitably delaying 
the cure, it is mere folly to imagine that a complete 
prevention of this only effective restorative to business 
could be other than disastrous in the extreme. It must 
result in the development of all essential industries by 
our foreign competitors and by the destruction of our 
own productive enterprises unless the Government 


1T# United States vs. Patten, 226 U. S. 525 (see page 542). 1913. 



156 DOES PRICE FIXING DESTROY LIBERTY? 

soon relinquishes or lessens its exactions. At the 
present moment we see all other Governments en¬ 
gaged in fostering the development of their com¬ 
petitive power, with the single exception of Rus¬ 
sia; so that there has been no time in history when 
it could be more dangerous further to harass and 
penalize those of our citizens engaged in industry. 
We have already, particularly in the Public Serv¬ 
ice utilities, too many dangerous and disturbing 
factors. Unnecessarily to extend such dangers to 
the whole trade of the United States, and to enforce 
regulations difficult of application to the merchandis¬ 
ing of commodities, under conditions that can never 
receive adequate judicial consideration, or be workable 
upon a business basis, must, inevitably, bring on finan¬ 
cial depression with all its consequent ills. These causes 
have often proved the death of Liberty, not only in 
trade, but in the broader meaning. 


CHAPTEE VIII. 


General Conclusions. 

“All who joy would win 
Must share it. 

Happiness was horn a twin ” 

—Byron. 

If the purpose sought has been accomplished, and 
it is understood that free and untrammeled competition 
is a necessary foundation both of Liberty and plenty; 
that market price is but the price varying from mo¬ 
ment to moment which results from unrestricted free¬ 
dom, and without which real competition is an impossi¬ 
bility ; that those things which men use have real value, 
and not the mere counters which carry on the exchange 
of commodity for commodity called “trade”; that men 
should not, as is customary, thank others when they 
give things of real value in exchange for the mere fa¬ 
cility of trading called “money”; that Courts have 
fallen into error in deciding that an essentially wrong¬ 
ful act has been committed when grown men, in a bar¬ 
gain freely made and to their mutual satisfaction, have 
given a moderate amount of goods for a large number 
of depreciated counters; that no one ever feels any dis¬ 
tress when the reverse takes place and a larger amount 
of real things is exchanged for a smaller amount of 
such counters;—when these foregoing fundamental 
principles are fully taken into account, then only can 
clearly be comprehended the results of a violation of 
these essential truths. 


( 157 ) 


158 DOES PRICE FIXING DESTROY LIBERTY? 

It has been said that men expect results, but 
receive consequences, and perennial consequences 
have always come, true to principle, where these 
eternal laws are violated by men. The guardian¬ 
ship of adults by the State destroys manhood and the 
Liberty that manhood always craves. The mother of 
risk is uncertainty, and, no matter what the effort to 
ignore it, risk must be paid for—and it is the most 
expensive thing in business. To make the penalty of 
a mistaken opinion, as to anything, possible destruc¬ 
tion, is the worst form of tyranny; and to threaten men 
in trade with discredit, ruin, and even imprisonment, 
for guessing wrongly the inscrutable risks of production 
as a means of terminating scarcity, is no more effective 
than to attempt to stop a conflagration by deluging it 
with a combustible. But the worst evil of all is that 
nothing so jeopardizes Liberty as economic distress. 
Those who have sufficient influence to lead the world 
into these errors, as Mr. Mill has pointed out, are 
always ready enough to shift the burden of their 
errors upon those who have chiefly suffered by them, 
and thus to urge an establishment of that terror 
which is always the ultimate result of such a prop¬ 
aganda. Envy, though the meanest basis of hu¬ 
man conduct, is always the most certainly and 
promptly punished of any of our faults, even pun¬ 
ished not merely by a loss of prosperity, but the great¬ 
est punishment—the loss of Liberty also. But as our 
poet has so well said: “Happiness was born a twin.” 
We must all rise or fall together, where freedom and 
free competition are preserved; and though men have 
persecuted those who preached the duty of brotherly 
love with its accompanying well wishing, they have 
always paid for such deeds in sackcloth and ashes. 


ADDENDA. 


CHAPTER IX. 


The Aftermath. 

“They who are intrusted to judge ought to be free from 
“vexation that they may determine without fear. 
“The law requires courage in a Judge and, there- 
“fore, provides security for the support of that 
“courage” 

—Chief Justice North—afterwards Lord 
Chancellor—inBamardistonvs. Soame 
( 1674 ), 6 How. St. Tr. 1096 . 

And now that we have the inevitable aftermath; 
now that business men, farmers, all are seeking aid 
from the Government because of ruinously low prices; 
now that we see panic in Japan, moratoriums in Bos¬ 
ton, Cuba asking and even getting countenance from 
our Government, that there may be resources to carry 
it through; business men on all sides seeking and get¬ 
ting extensions; men by the thousands losing their oc¬ 
cupations, it is being asked: “How was it possible to 
predict accurately the inevitability of all this, in the 
foregoing pages, written at a time when everything was 
at the highest, and the public convinced that it was 
there to stay forever V 9 

It is regrettable, however, that credit cannot be ac¬ 
cepted. The task was no more difficult than predicting 
that the sun will rise to-morrow. Even an elementary 
inquiry as to economic law at once establishes that all 

(159) 




160 DOES PRICE FIXING DESTROY LIBERTY? 

such matters are regulated by the unvarying perpetual 
law which, like all of the laws of Perfect Wisdom, have 
and always will produce like results from like causes. 

It should never he forgotten that, as has been well 
said: “Natural justice is the conformity of human 
“laws and actions to natural order, and this collection 
“of physical and moral laws existed before any posi¬ 
tive institutions among men. And while their ob¬ 
servance produces the highest degree of prosperity 
“and well-being among men, the non-observance or 
“transgression of them is the cause of the extensive 
“physical evils which afflict mankind. If such a nat- 
“ural law exists, our intelligence is capable of under¬ 
standing it; for, if not, it would be useless, and the 
“sagacity of the Creator would be at fault. As, there- 
“fore, these laws are instituted by the Supreme Being, 
“all men and all states ought to be governed by them. 
“They are immutable and irrefragible, and the best 
“possible laws: therefore necessarily the basis of the 
“most perfect government, and the fundamental rule 
“of all positive laws, which are only for the purpose of 
“ upholding natural order, evidently the most advanta- 
“ geous for the human race. * * * How could man 

“understand the necessity of labor to obey the irresist- 
“ible instinct of his preservation and well-being, with- 
“ out conceiving at the same time that the instrument of 
“labor, the physical and intellectual qualities with 
“which he is endowed by nature, belongs to him ex- 
“clusively, without perceiving that he is master and 
“the absolute proprietor of his person, that he is born 
“and should remain free? 

“But the idea of Liberty cannot spring up in the 
“mind without associating with it that of property, in 
“the absence of which the first would only represent an 
“illusory right, without an object. The freedom the 


THE AFTERMATH 


161 


* 1 individual has of acquiring useful things by labor 
“supposes necessarily that of preserving them, of en- 
“ joying them, and of disposing of them without 
“ reserve. * * * Thus Liberty conceived in this 

“ manner becomes property. * * * The Physio¬ 

crats, then, placed absolute freedom, or property —as 
“the fundamental right of man—freedom of Person, 
“ freedom of Opinion, and freedom of Contract, or Ex- 
“ change; and the violation of these as contrary to the 
“law of Providence, and therefore the cause of all evil 
“to man.” 177 

Another great writer says: “Natural laws which 
“political economy discovers, whether we call them 
“laws of production or laws of distribution, have the 
“same proof, the same sanction and the same constancy 
“as the physical laws. Human laws change, but the 
“natural laws remain, the same yesterday, to-day and 
“to-morrow, world without end. * * * And so it 

“has been with attempts of human law to fix and regu- 
u late prices, which involve the same great laws of dis¬ 
tribution in combined forms. Human law is always 
“potent to do as mankind will with what has been pro¬ 
duced but it cannot directly affect distribution. That 
“it can reach only through production. * * * If 

“we look over the legislation by which the ruling por¬ 
tion of our communities have striven to affect the 
“distribution of wealth, we shall find that (as if con- 
“scious of its hopelessness) they have seldom if ever 
“tried directly to affect the distribution of wealth; but 
11 have tried to affect distribution indirectly through 
“production 

It is to be remembered that Mr. Mill was ulti¬ 
mately driven to the same conclusion, and, accordingly, 

177 Henry Dunning MacLeod, “Elements of Economics,” Book I, 
Chap. V, Sec. 3. 



162 


DOES PRICE FIXING DESTROY LIBERTY? 


Governor Coolidge was but announcing a long realized 
fundamental truth when he advised the Legislature 
of Massachusetts that its function was to “discover” 
laws. But, whilst human laws cannot repeal economic 
laws, they are constantly subject to reversal by them— 
often after infinite harm has been done. 

If our suffering from such errors is less than that 
of other people, it is doubtless because the Supreme 
Court has always had the power and will to interpose 
the shield of the Constitution between the ephemeral 
follies prompted by temporary difficulties, and reme¬ 
dies that endanger freedom. It follows that the preser¬ 
vation of these “discovered” laws is really the great 
constitutional service of that greatest of Courts. It is 
hoped, therefore, that a further brief discussion of a 
few of the fundamental “discovered” and, therefore, 
constitutional laws, applying to the Lever Act, and 
founded on natural justice, may be pardoned. 

For example, one for which we have both Divine 
and human authority is that as “no man can serve two 
masters,” and, therefore, be a proper judge in his 
own case, an Act must be fundamentally wrong and 
unconstitutional, that, in real substance, first consti¬ 
tutes him the judge in the fixing of the prices of his 
property; and then appoints the judges to try him, 
jurors who are also acting as judges in their own cases 
with diametrically conflicting interests. Lord Chief 
Justice Hobart, in Day vs. Savage, 178 long since, 
though not buttressed by our Constitution, gave as an 
illustration for acts of Parliament void for violation 
of “natural equity,” those making men judges in their 
own cases, saying: “Even an act of Parliament made 
“against natural equity, as to make a man a judge in his 


178 Day vs. Savage, Hob. 85-87. 



THE AFTERMATH 


163 


“own case , is void in itself, for jura naturae sunt immo- 
“hilia, and leges legum” And Lord Blackburn, speak¬ 
ing for all the attending Judges, again says: “It is 
“contrary to the general rule of law, not only in this 
“country, lout in every other, to make a man a judge in 
“his own case.” 

Perhaps the most important of these “discovered” 
laws is that those appointed, or forced by law to exer¬ 
cise judgment, or a use of discretion, must be protected 
from the consequences of the risks of the errors neces¬ 
sarily involved. 

This law was naturally among the earliest to be 
“discovered,” and its violation as naturally and rea¬ 
sonably involves the greatest degree of resentment and 
distress. It is in the writer’s opinion the most import¬ 
ant in the whole discussion. It, therefore, becomes of 
prime importance clearly to ascertain its reason, be¬ 
cause, as Lord Coke, so long ago and so well said: 179 
“The law is unknown to him that knoweth not the rea- 
“son thereof, and that the known certainty of the law 
“is the safety of all”; and also because the law consists 
“not in particular instances and precedents, but in the 
“reason of the law.” 180 

From the earliest time, and in all civilized nations, 
the higher Judiciary have always given themselves com¬ 
plete immunity from their errors in judging. Con¬ 
stantly having to use judgment, they inevitably at once 
ascertained the impossibility of satisfactorily perform¬ 
ing this higher function in an atmosphere of constant 
annoyance, anxiety and fear; and it was for the public 
benefit—not from timidity or favor to themselves— 
that they declared this never departed-from exemption. 
But since “reason is the life of the law,” and its prin- 

179 1 Inst. Epil. 

1,0 Lord Chief Justice Holt, Ashby vs. White, 2 Ld. Reym. 



164 


DOES PRICE FIXING DESTROY LIBERTY? 


ciples must necessarily be applied under the maxim: 
“Ubi eadem Ratio ibi idem Jus,” 181 the principle has 
been steadily, and from necessity of justice, wider and 
wider applied. “Like reason making like law.” 

It is not necessary to examine a multitude of cases, 
as the Supreme Court itself has thoroughly established 
this proposition in more than one decision unanimously 
arrived at. Reference to one of them, Spalding vs. 
Vilas, 182 must be sufficient to conclude this question. In 
that case the Postmaster General, not a Judge at all, 
reached and expressed an opinion in the course of his 
duty. He was under no necessity of such expression, but 
he did act in the performance of a dutty entrusted to him. 
Alleged damage followed, and suit was brought against 
him. The Supreme Court, after examining the gen¬ 
eral cases applying to the Judiciary, inevitably reached 
the unanimous conclusion that for like reasons he must 
also be immune from suit, saying: “The allegation of 
“malicious or corrupt motives could always be made, 
“and if the motives could be inquired into Judges 
“would be subjected to the same vexatious litigation 
“upon such allegations, whether the motives had or had 
“not any real existence. * * * The doctrine 
“* * * has a deep root in the common law. It is to 
“be found in the earliest judicial records, and it has 
“been steadily maintained by an undisputed current 
“of decisions. * * * It is essential in all Courts 

“that the Judges who are appointed to administer the 
“law should be permitted to administer it under the 
“protection of the law, independently and freely, with- 
11 out favor and without fear. * * * How could a 

“Judge so exercise his office if he were in daily and 
“hourly fear of an action being brought against him, 

181 Coke upon Littleton, io a. 

182 Spalding vs. Vilas, 161 U. S. 483. 1896. 



THE AFTERMATH 


165 


“and having the question submitted to a jury * * * ? 
“Does an action lie against a man for maliciously doing 
11 his duty f I am of opinion that it does not * * * 

“No Judge, no jury, no witness * * * could dis¬ 
charge his duty freely if not protected by a positive 
“rule of law from being harassed by actions * * * 
“and * * * that the position of the defendant 
“manifestly required a like protection to be extended 
“to him and to all other officers in the same position.” 
“There is,” Mellor, J., said, “little doubt that the 
“ reasons which justify the immunity in the one casd 
11 do in great measure extend to the other ” 

Nowhere has this been better stated than by Lord 
Chancellor North, centuries ago, in Barnardiston vs. 
Soame: 183 “They who are intrusted to judge ought to 
“~be free from vexation that they may determine with- 
“out fear .” 

As the Courts decide upon the real substance of 
things, let us inquire what this Act requires. 

It has, again and again, been determined that the 
fixing of charges, etc., is a purely legislative function, 
to be exercised by the Legislature or its properly 
denominated substitutes. It, of course, follows, from 
the decisions already referred to, that both are immune 
from action or indictment. The Lever Act, departing 
from established custom, appoints each seller of certain 
commodities the price determining authority. His 
judgment, whatever it may be, must control the pri¬ 
mary act. But he, unlike the others, has no volition 
whatever, for he must decide under penalty of losing 
not only his means of livelihood, but even his constitu¬ 
tional inalienable “right of pursuit.” 

But this is not all by any means. As the Supreme 
Court has itself pointed out, this legislative function 


183 Barnardiston vs. Soame (1674), 6 How. St. Tr. 1096. 



166 DOES PRICE FIXING DESTROY LIBERTY? 

forced upon him is perhaps the most difficult in all the 
law, most liable to error, most requiring of aid from 
every source. In the Knoxville case, 184 it is expressly 
termed u a delicate and dangerous function”; and if 
the International Harvester case 185 be understood, 
where a continuing business is involved, its perform¬ 
ance is beyond the powers of the human mind. And, 
yet, it is just in this case alone that every citizen of 
the United States is to be forced to judge under the 
fear of ruin, fine and imprisonment. Can that be ai 
possibility under the laws of any highly civilized people, 
protected by the Constitution ? 

As is illustrated by the latest application of the 
underlying principle in the able opinions of Justices 
McReynolds and Brandeis in the recent cases of Okla¬ 
homa vs. Love ; 186 and Ohio vs. Ben Avon Borough, 187 
where it was so clearly held that, in such cases, men 
cannot be punished for forced exercise of their judg¬ 
ments, unless and until they have a further and full 
opportunity of guidance from independent and trained 
jurists, and acted in defiance of it 1 

The riddle of the wrong construction of the Lever 
Act is solved, when it is once clearly understood that 
its real contention is that millions of men are to be 
forced to judge at the penalty for failure to do so of a 
nullification of their constitutional <( right of pursuit”; 
and that, having been thus forced, the whole power 
of the United States is to be used to persuade twelve 


184 City of Knoxville vs. Knoxville Water Co., 212 U. S. 13. 
1909. 

185 International Harvester Company of America vs. Kentucky, 
234 U. S. 216. 1914. 

188 The Oklahoma Operating Co. vs. Love, 252 U. S. 331. 1920. 
187 Ohio vs. Ben Avon Borough. Decided by the Supreme Court 
June 1, 1920. Not yet reported. 



THE AFTERMATH 


167 


other men—i. e., a jury—that the judgment citizens 
were thus forced to use did not accord with that of the 
latter; and, having done so, to ruin the former by fine 
and imprisonment, because of this ex post facto deci¬ 
sion. And, at the best, even if these twelve men should 
guess with the sellers, thereby to subject these business 
men to endless anxiety, harassment and fear. As Lord 
Justice Scrtjtton says in the latest case upon this sub¬ 
ject : 188 4 ‘Success in every action is no consolation to a 
“defendant, * * * and hampered by fear of such 
“an action in the performance of his judicial duty. The 
“same reason appears to me to apply to the functions 
“of those administering the lunacy laws.” 

It must be understood that under this interpreta¬ 
tion the guessing has to be done after a removal of all 
the landmarks and guides, such as market price and the 
price resulting from freedom, that men have been in¬ 
structed and accustomed to follow for centuries. 

It is believed that there is no parallel for this in 
all history, except in the case of the daughter of Orthus, 
but that gives nothing but encouragement, for, from 
the dawn of higher civilization, she has always been 
held to be a monster, whose self-destruction became in¬ 
evitable upon the solving of her riddle, and the cer¬ 
tainty that an Oedipus must appear to remedy tha 
cruelties involved in such an interpretation. Naturally 
she has been inevitably considered the emblem of 
Death! In the present case, of course, of “Trade.” 

There does not appear to be anywhere a clear com¬ 
prehension of what “value” means, or consists, not¬ 
withstanding the perfectly clear and scientific state¬ 
ment of it by Mr. Justice Holmes in the International 


188 1920 L. R., 3 K. B. 197. 



168 


DOES PRICE FIXING DESTROY LIBERTY? 


Harvester case ; 189 and, though it can be found in the 
works of other able economists, one of whom well says: 
“What we deem the point of real value, or actual 
“equivalence, we speak of as market value, from the 
‘ ‘ old idea of the market or meeting place of those who 
“wish to make exchanges, where competition or the 
“higgling of the market brings out the highest bidding 
“or the lowest offering in transactions of exchange. 
“And when we wish to ascertain the exact value of a 
“thing we offer it at auction or in some other way sub- 
“mit it to competitive offers. * * * Value is thus 

“an expression which, when used in its proper economic 
“sense of value in exchange, has no direct relation to 
“any intrinsic quality of external things, but only to 
“man’s desires. * * * For the point of equival¬ 

ence or equation that we express or assume when we 
“speak of the value of a thing is a point where the 
“desire to obtain in one mind so counterbalances in its 
“effect on action the desire to retain in another mind 
“that the thing itself may pass in exchange from the 
“possession of one man to the possession of another with 
“mutual willingness. Now this fact that the percep¬ 
tion of value springs from a feeling of man, and has 
“not at bottom any relation to the external world 
“* * * is what lies at the bottom of the grotesque 

“confusions. * * * Value has of course its origin 
“in the feeling of desire. Thus it is that there is no 
“measure of value among men save competition or the 
“higgling of the market, a matter that might be worth 
“the consideration of those amiable reformers who so 
“lightly propose to abolish competition. * * * The 

“law of competition is one of these natural laws, with- 


189 International Harvester Company of America vs. Kentucky, 
234 U. S. 216. 1914. 



THE AFTERMATH 


169 


“out an understanding of which we cannot fully under¬ 
stand that Intelligence to which we must refer the 
“origin and existence of the world has provided that 
“the advance of mankind in civilization should be an 
“advance towards the general enjoyment of literally 
“boundless wealth. * * * Competition is indeed 

“the life of trade, in a deeper sense than that it is & 
“mere facilitator of trade. It is the life of trade in 
u the sense that its spirit or impulse is the spirit on 
“impulse of trade or exchange.” 

From every point of view, from every source of 
knowledge, the improper interpretation of the Lever 
Act; the view that it was intended to draw the very 
life blood of competition simply requires a belief that 
an Act passed to secure adequate supplies had as its 
ultimate purpose such a restraining of trade itself as 
has never been attempted, and that would inevitably 
reduce all supplies to a minimum. 

Another instance perfectly clarifies the distinction 
between the Nash 190 and the International Har¬ 
vester 191 cases, that has caused such perplexity to many 
outside of the Supreme Court, though not within it. 
The “discovered” rule there involved is that men have 
an inherent right of adequate opportunity for self- 
defense; this imperatively requires a sufficient cer¬ 
tainty of knowledge as to that which they must defend 
themselves against. They must be given a clear stand¬ 
ard of conduct to follow, if they are to be justly pun¬ 
ished for not following it. No one seems to dispute 
that. But what has caused the confusion is overlook¬ 
ing that the “standard” need not be in any particular 
statute. If it be established either by Common Law or 

190 Nash vs. United States, 229 U. S. 373. 1913. 

191 International Harvester Company of America vs. Kentucky, 
234 U. S. 216. 1914. 



170 


DOES PRICE FIXING DESTROY LIBERTY? 


a common knowledge of those involved, or so that the 
ordinary man should be familiar with it, it is amply 
and justly sufficient. But he must or should have actual 
knowledge from that already determined, and not from 
surmise or guess or conclusions upon which there be no 
fixed standard and different results must necessarily he 
reached by different minds differently circumstanced. 

All this has been so long, so frequently, and so 
justly, and continuously announced, that one feels 
almost helpless at having to discuss it again. Over a 
century ago Mr. Justice Washington said in the Sharp 
case , 192 later confirmed by the Supreme Court of the 
United States itself: “Laws which create crime ought 
“to be so explicit in themselves, or by reference to some 
“other standard that all men subject to their penalties 
“may know what act it is their duty to avoid.” See, 
too, the Brewer case , 193 affirming this. And this is 
exactly the basis of the decision in the Standard Oil , 194 
the Nash , 195 and the International Harvester 196 cases, 
with a multitude of others. 

The Lever Act is, therefore, in this respect, per¬ 
fectly constitutional; for, though it names no “stand¬ 
ard,” there is a well established “standard” that the 
Common Law, for perhaps a thousand years, and the 
Supreme Court have, again and again, announced. 
Each owner, as well as each purchaser, has always had 
the right to fix the price at which he will sell or will 
buy, provided only that there is no restraint of com¬ 
petition, no unlawful monopoly or act. The Lever 

192 U. S. vs. Sharp, Pet. C. C. n8. 

193 U. S. vs. Brewer, 139 U. S. 278. 1891. 

194 Standard Oil Company of New Jersey vs. United States, 
221 U. S. 1. 1911. 

198 Nash vs. United States, 229 U. S. 373. 1913. 

198 International Harvester Company of America vs. Kentucky, 
234 U. S. 216. 1914. 





THE AFTERMATH 


171 


Act, therefore, is one of “the instances” of which the 
law “is full,” and its “standard” is one of complete 
freedom, undisturbed by unlawful restraints or monop¬ 
oly, and governed alone by the results of free competi¬ 
tion and the resulting “market price ” It is, there¬ 
fore, as plain as the noonday sun that what is being 
asked is not at all that men be punished for violating 
a known defined “standard,” of which they should have 
knowledge, but for adhering to it and continuing to 
obey the mandates again and again given to them by 
the Supreme Court itself . It cannot be conceived that 
there could be clearer statement of this than that so 
repeatedly made by the Supreme Court itself. Indeed, 
the decisions are but constant repetitions of the prin¬ 
ciple, not that men can be punished for undefined crime, 
but that the centuries old maxim: “Id certum est quad 
“certum reddi potest” So that what is really hap¬ 
pening is that the effort is being made to establish as 
complete a nonsequitor as can be well imagined. 

Again, we have the “discovered” principle, so 
magnificently stated in the Supreme Court’s decision 
in the Monongahela case , 197 where it was determined, 
(it already being established, that the time of taking is 
the time of fixing the value of property), that “just 
compensation” means, and can only mean “a full 
equivalent.” And yet it has recently been argued that 
by confusing “value” with “price,” matters can con¬ 
stitutionally be so manipulated as to deprive a man of 
his property by but giving him the means to replace 
but half of it, though the whole has been taken! 

Again, there is the “discovered” principle under¬ 
lying the Connolly case , 198 but in an aspect not hereto- 

197 Monongahela Navigation Company vs. United States, 148 
U. S. 312. 1893. 

198 Connolly vs. Pipe Co., 184 U. S. 540. 1902. 



172 DOES PRICE FIXING DESTROY LIBERTY? 

fore realized. Remembering the principles pointed 
out by Mr. Justice Holmes as to what constitutes 
“value ,’’ it is manifest that the unconstitutionality of 
this Act in this respect is not confined to the distinction 
between agriculturists and all other classes. Of course, 
all should see that it cannot accord with natural jus¬ 
tice to hold that the drover has no untrammeled rights 
of determining the value of his own food cattle, nor to 
be guided by the results of market price resulting from 
free competition, whilst a farmer has both, but that 
the defect extends much deeper. Let us suppose that 
two men have saved equal sums, and one has invested 
his savings in horses, whilst the other, in food cattle. 
The man owning the food cattle is, if current conten¬ 
tions are correct, deprived of both the guidance of the 
“market price” and his own free and untrammeled 
judgment, whilst the owner of the horses, should the 
cattle owner wish to buy of him, can not only fortify 
himself with both, but can even call upon the District 
Attorney to have the other fined and jailed for doing 
exactly the same thing. If this be so, of what avail the 
fifth Amendment? 


CHAPTER X. 


Final Summary. 


The foregoing detailed discussion has failed of use¬ 
ful purpose, if we have not reached a result that can he 
clearly and succinctly stated for ascertained truth must 
always tend to succinctness and simplicity of state¬ 
ment. 

The “discovered” constitutional truths, may, there¬ 
fore, he condensed to the following propositions, now 
fully established hy the Supreme Court: 

1st. That “Liberty is the greatest of all 
rights,” and that it cannot exist without “Life,” 
“the pursuit of happiness,” and its resulting pri¬ 
vate property, and its legitimate fruits and profits. 
These have, consequently, always been “unalien¬ 
able” constitutional rights of every free man liv¬ 
ing under and helping to govern our free Repub¬ 
lican nation. That property, to this extent, at 
least, becomes and is a synonym for “Liberty,” so 
that wherever arbitrary governmental impairment 
of the “value” of private property is found, by 
“price fixing” or other despotic ukase or decree, 
property and constitutional liberty have been in¬ 
vaded—and Communistic slavery has, to that ex¬ 
tent, been substituted for the Republican Govern¬ 
ment of free men under constitutional protection. 

2nd. That all men naturally love freedom, 
however ignorant they may be of that eternal vigi¬ 
lance and the necessary measures to preserve it, 
and where their folly has caused them to lose it, 
always try to return to it. Liberty destroying price 
fixing, of necessity, an invasion of property and 
thus of its synonym “Liberty,” never can long con- 
073) 


174 


DOES PRICE FIXING DESTROY LIBERTY? 


tinue without an application of the unmitigated 
terror established in the French Revolution, that 
so completely annihilated every principle of con¬ 
stitutional right. 

3rd. That the “just compensation” of the Con¬ 
stitution consists simply “of full and perfect 
equivalency of value,” the meaning of that “value” 
must be definitely determined before “just com¬ 
pensation” can he properly understood and ap¬ 
plied; and that that determination has, happily, 
been attained in a series of unvarying decisions of 
the Supreme Court, that absolutely settle the mat¬ 
ters now under discussion in favor of the prin¬ 
ciples necessary to protect our Constitutional Lib¬ 
erty. 

4th. That the “value” of ordinary commodi¬ 
ties can only he determined by the results of free 
competition, in a free government, conducted by 
free men. “Value,” being not at all the result of 
any one citizen’s view, desire or decree, but is that 
of all men, acting in a free market in free competi¬ 
tion, in untrammeled freedom; and it is, therefore, 
always a matter of ascertainable fact; never of 
mere guess or surmise; it is a fact of the existing 
world; of existing conditions; never of imaginary 
worlds or conditions, or imaginary ideas. It is al¬ 
ways the result, like contract, of a meeting,—an 
agreement of minds; not the view of one, unaccepted 
by another, but a result regulated solely by “the 
relative intensity of the desires of the whole com¬ 
munity.” “Value” deals only with the actual, never 
with imaginary conditions other than the facts. Its 
ascertainment is not to be compelled by peril of in¬ 
dictment and through guesses as to what the com¬ 
munity would have given, but only by what it actu¬ 
ally does give. Its ultimate determination always 
finally rests upon what men are willing to give 
for a commodity, rather than incur the exertion 
necessary to create it for themselves. Value, there¬ 
fore, can no more be defined, or known than a con¬ 
tract can, until an actual and accomplished meeting 


FINAL SUMMARY 


175 


of more than one mind! It is, therefore, impos¬ 
sible of ascertainment until that has taken place. 

5th. That “free competition” thus becomes a 
necessary constitutional, “unalienable” right of 
all mankind, as through it alone their other ‘ ‘ un¬ 
alienable” rights can be ascertained, protected or 
enforced. For men can neither measure “just com¬ 
pensation” nor reach that certain definition or 
“standard” upon which to act, without which crim¬ 
inal punishment can neither be just nor constitu¬ 
tional. And since they are entitled constitutionally 
to “perfect equality of value” for property 
taken, and clarity of “standard ” if charged with 
crime, their property cannot possibly be taken, or 
their Liberty destroyed by imprisonment, through 
the device of forcing them on behalf of a prosecut¬ 
ing government to guess what they and others 
might agree upon; their only constitutional right 
and guide being what has been actually and as a 
fact agreed upon by free men, acting in a free mar¬ 
ket and through “free competition.” “What value 
determines is not how much a thing is desired, but 
how much any one is willing to give for it. * * * 

Thus it is that there is no measure of value among 
men save competition or the higgling of the mar¬ 
ket, a matter that might be worth the consideration 
of those amiable reformers who so lightly propose 
to abolish competition. It is never the amount of 
labor that has been exerted into bringing a thing 
into being that determines its value, but always the 
amount of labor that would be rendered in ex¬ 
change for it. * * * It is not the exertion that a 
thing has cost in past times, that gives it value, but 
the exertion that its possession will in future time 
dispense with, for even the immediate is in strict¬ 
ness future. * * * The point of real value, or 
actual equivalence, we speak of as market value, 
from the old idea of the market or meeting place 
of those who wish to make exchanges, where com¬ 
petition or the higgling of the market brings out 
the highest bidding or the lowest offering in trans- 


176 DOES PRICE FIXING DESTROY LIBERTY? 

action of exchange. And when we wish to ascer¬ 
tain the exact value of a thing we offer it at auc¬ 
tion or in some other way subject it to competitive 
offers. * * *” 

Whilst the writer would be proud beyond meas¬ 
ure had these immutable principles been mere original 
thoughts of his own, all this, most fortunately for our 
country, has, on the contrary, been pointed out, con¬ 
tended for,—even fought for, and actually achieved at 
least since Magna Charta, and nowhere better than by 
our Supreme tribunal in Monongahela, 199 Harvester 200 
and Collins 201 cases, as well as the others that have 
already been referred to. We thus have a complete ex¬ 
planation of why restraints of trade and monopolies 
have always been said to be so pernicious; for what 
makes things more difficult to obtain in trade, neces¬ 
sarily enhances their value, and all these impediments 
to free trading, of necessity, increases the cost and dif¬ 
ficulty of maintaining our life. But the remedy is not 
to be found by arbitrary and unconstitutional addi¬ 
tional discouragement and impediments to trade, but 
solely keeping it under the spur that its regulation by 
free competition always best supplies. Not by making 
them Communistic slaves, not by the injustice of giving 
unequivalent return for what is taken, but by the en¬ 
couragement, that perhaps more encourages production 
than anything else, of knowing that they will not be un¬ 
justly treated as to the results of their toil when cre¬ 
ated. 

It will thus be seen that neither seller nor any jury 


199 Monongahela Navigation Company vs. United States, 148 
U. S. 312. 1893. 

200 International Harvester Company of America vs. Kentucky, 
234 U. S. 216. 1914. 

201 Collins vs. Kentucky, 234 U. S. 634. 1914. 



FINAL SUMMARY 


177 


acting subsequently can constitutionally fix “value,” 
nor be criminally punished for failure to satisfactorily 
perform forced attempts beyond the power of human 
minds. It can be clearly seen why the doctrine of “free 
competition” has always been so safeguarded, for, 
without it, men can never properly ascertain their con¬ 
stitutional rights as to their property and Liberty. It 
must also be understood why the Supreme Court has 
always insisted upon the right of both those desiring 
to sell and those wishing to purchase, to fix freely and 
in their own untrammeled discretion both what the one 
is willing to take and the other is willing to give, for, 
without this right, “free competition” cannot exist, nor 
a correct ascertainment of “value” be found. 

All this, perhaps, may be but an instance of the 
adage that 1 ‘ Truth lies at the bottom of the well . 91 But, 
nevertheless, this is the truth, and truth ascertained and 
declared by the Supreme Court itself. And for the pur¬ 
poses of interpretation, ascertained before the passage 
of the Lever Act, and, therefore, definitely determining 
the terms therein involved. It cannot be believed that 
these provisions will ever be departed from, much less 
that even, if so, men will be punished for having loyally 
followed and been guided by them whilst they remained 
in full and self-vindicating determination. If any one 
questions all or any of this, he is earnestly requested to 
show a single decision of the Supreme Court that in 
anywise does or has ever departed from it. 

It, therefore, is not correct to say that arbitrary 
price fixing leads to slavery or Communism—for it is 
established slavery and Communism! No matter how 
popular such offenses against Liberty may occasionally 
be in times of stress, they always are, of necessity, a 
creation of unjust privilege of some classes against 
others, for they never have been, or can be, of equal 


178 DOES PRICE FIXING DESTROY LIBERTY? 

application. They are in fact but a selling of our birth¬ 
right of Freedom for a mess of pottage, which in turn 
is withdrawn as a necessary economic effect of them; 
are always an offense against Liberty, which, therefore, 
makes it impossible that we should be too grateful to 
those patriots who devised the Supreme Court of the 
United States, that has saved us from such danger 
throughout all the years of the Constitution. 

The answer, therefore, to our title is not that price 
fixing endangers Liberty; but that it absolutely obliter¬ 
ates it. 

For these and so many other reasons it cannot, 
therefore, be believed that a statute can be found that 
can, by any possibility be construed to violate more 
principles of “ discovered” —that is, as has been pointed 
out, eternal law, protected by our Constitution, than 
the Lever Act thus improperly construed; nor, indeed, 
that any Act or any conspiracy could so fatally restrain 
trade, and insure continued scarcity. Is it not, there¬ 
fore, still safe to believe that “Impius et crudelis judi- 
(i candus est, qui libertati non favet. Angliae jura in 
“omni casu libertati dant favorem V* 


The End. 


TABLE OF CASES. 


Page 


Adams vs. Tanner. 58 

American Tobacco Co., United States vs. 43 

Ashby vs. White. 163 

Atkins vs. The Fibre Disintegrating Company. 44 

Barnardiston vs. Soame. 165 

Branson vs. Bush.56, 135 

Brewer, United States vs. 170 

Chicago, Burlington, etc., R. R. Co., etc., vs. Chicago_56, 70 

Cleveland, Cincinnati, Chicago & St. Paul Ry. Co. vs. Backus, 134 

Cohen Company, United States vs.72, 124, 126 

Colgate, United States vs.101, 102 

Collins vs. Kentucky.19, 84, 138, 139 

Connolly vs. Union Sewer Pipe Co.52, 53, 171 

Craig vs. Missouri .L4, 136 

Day vs. Savage. 162 

Delaware & Hudson Company, United States vs. 44 

Fox vs. Washington. 139 

Gulf, Colorado & Santa Fe Railway Company vs. Texas 

Packing Co. 45 

Harvester Case (see International Harvester Co. vs. Ken¬ 
tucky) . 

Hamilton vs. Kentucky Distilleries & Warehouse Co. 77 

Harrison vs. St. Louis & San Francisco Railroad Company, 146 

Hopkins vs. Lee .45, 48 

International Harvester Company of America vs. Kentucky, 


8, 18, 22, 27, 79, 81, 83, 84, 117, 125, 138, 139, 166, 168, 169, 170 


Knight, United States vs. 14 

Knowlton, et al., vs. Moore.13, 44 


( 1 79 ) 






















180 


TABLE OF CASES 


Page 

Knoxville (City of) vs. The Knoxville Water Co., 

20, 108, 123, 166 

Lincoln Gas & Electric Light Company vs. City of Lincoln, 24 


Loan Assn. vs. Topeka . 57 

Louisville & Nashville Railroad Company vs. United States, 23 

Loewe vs. Lawlor . 150 

McFarland vs. American Sugar Refining Co. 53 

Malone vs. Kentucky. 84 

Miller vs. Strahl . 139 

Milligan, Ex parte. 76 

Mogul Steamship Co. vs. McGregor.85, 86 , 87, 88 , 89, 106 

Monongahela Navigation Company vs. United States, 

133, 134, 135, 171 

Myatt, United States vs.33, 47, 72 

Nash vs. United States. 8 , 70, 80, 82, 138, 139, 169, 170 

National Cotton Oil vs. Texas. 107 

New York, Lake Erie & Western Railroad vs. Estill. 45 

Nordenfelt vs. Maxim . 149 

Northern Pacific Railway Company vs. North Dakota .... 23 

Northern Securities Co. vs. United States.45, 65, 108 

Ohio, etc., vs. Ben Avon.67, 68 , 166 

Oklahoma Operating Co. vs. Love .67, 166 

Omarchevarria, Secundino vs. Idaho. 140 

Omaha vs. Omaha Water Co.123, 127 

Patten, United States vs. 155 

Pennsylvania Railroad Co., United States vs.19, 84, 138 

Pollock vs. The Farmers Loan & Trust Company. 14 

Prigg vs. Pennsylvania . 136 

Prohibition Case . 77 

Reading Company, United States vs. .. 98 

























TABLE OF CASES 


181 


Page 

Rhode Island vs. Massachusetts. 14 

Roberts vs. Benjamin.. 45 

Shrader’s Sons, Inc., United States vs. 102 

Sharp, United States vs. 170 

Smith vs. Texas. 57 

Spalding vs. Vilas. 164 

Sparf vs. United States. 71 

Spokane Dry Goods Co., United States vs.72, 73, 74, 80 

Standard Oil Company of New Jersey vs. United States, 

14, 40, 85, 170 

Trans-Missouri Freight Assn., United States vs. 125 

Union Pacific R. R. Co., United States vs. 98 

United States Steel Corporation, United States vs.19, 130 

United States vs. American Tobacco Company. 43 

United States vs. Brewer . 170 

United States vs. Cohen Company.72, 124, 126 

United States vs. Colgate.101, 102 

United States vs. Delaware and Hudson Company. 44 

United States vs. Knight. 14 


United States, Louisville & Nashville R. R. Company vs... 23 

United States, Monongahela Navigation Company vs. 

133, 134, 135, 171 

United States vs. Myatt.33, 47, 72 

United States, Nash vs.8, 79, 80, 82, 138, 139, 169, 170 

United States Northern Securities Co. vs.45, 65, 108 

United States vs. Patten. 155 

United States vs. Pennsylvania Railroad Co.19, 84, 138 

United States vs. Reading Company. 98 

United States vs. Schraders’ Sons, Inc. 102 

United States vs. Sharp. 170 


























182 


TABLE OF CASES 


Page 


United States, Sparf vs. 71 

United States vs. Spokane Dry Goods Co.72, 73, 74, 80 

United States, Standard Oil Company of New Jersey vs., 


14, 40, 85, 170 


United States vs. Trans-Missouri Freight Assn. 125 

United States vs. Union Pacific R. R. Co. 98 

United States vs. U. S. Steel Corporation .19, 130 

Wadley Southern Railway Company vs. Georgia. 146 

Washington vs. Miller. 44 

Weed & Co. vs. Lockwood.54, 72, 76, 133, 134, 137, 140 

Western Union Telegraph Co. vs. Hall. 45 

Whitwell vs. Continental Tobacco Co. 99 

Wilder Mfg. Co. vs. Corn Products Refining Co. 39 

Willcox vs. Consolidated Gas Company.22, 114 


Lever Act (Act of Congress, approved August 10, 1917, 
Section 4, as amended by Section 2 of the Act approved 
October 22, 1919).... 37 
















BIBLIOGRAPHY. 


Richard T. Ely. Outlines of Economics. 

MacMillan Company, Third Ed., 1919. 

Ely and Wicker. Elementary Principles of Economics. 

MacMillan Company,1919. 

Irving Fisher. Stabilising the Dollar. 

MacMillan Company, 1920. 

Henry George. Progress and, Poverty. 

Doubleday, Page & Company, 1916. 

J. Laurence Laughlin. Money and Prices. 

Chas. Scribner’s Sons, 1919. 

Henry Dunning MacLeod. Elements of Economics. 

John Stuart Mills. Principles of Political Economy. 

Colonial Press, N. Y., 1899. 

Adam Smith. Wealth of Nations. 

E. P. Dutton & Co., 1917. 

F. W. Taussig. Principles of Economics. 

MacMillan Company, 1920. 

John Roscoe Turner. Introduction to Economics. 

Chas. Scribner’s Sons, 1919 

Coke Upon Littleton. Institutes Epil. 


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